california labor and employment alert...hourly wage up to minimum wage. in this way, subsidy pay...

VOLUME 36 - NUMBER 3 November 2017

TABLE OF CONTENTS

WAGE AND HOUR DEVELOPMENTS

MINIMUM WAGE COMPLIANCE UNDER THE FLSA IS MEASURED ON A WORKWEEK STANDARD......................................................................................................1

GIANTS SUCCESSFULLY CHALLENGE “FINAL” PAY CLAIMS BASED ON CBA AND FEDERAL PREEMPTION...............................................................................................2

SUPREME COURT’S PAGA DISCOVERY DECISION IMPLEMENTED................................4

DUE TO ITS STRONG COMPLIANCE EFFORTS, EMPLOYER PREVAILS IN MEAL AND REST PERIOD CASE...........................................................................................4

EMPLOYER DECERTIFIES FLSA COLLECTIVE ACTION OF BANK EMPLOYEES.............5

EMPLOYER PREVAILS IN “BAG CHECK” CASE ..................................................................7

EMPLOYER WINS PAY STUB CLAIMS AT CLASS ACTION TRIAL......................................8

EMPLOYEE NEED NOT SHOW A “KNOWING AND INTENTIONAL” VIOLATION OF THE PAY STUB STATUTE TO RECOVER PAGA PENALTIES.........................................9

DEDUCTION OF DRAW FROM FUTURE EARNINGS UNDER COMMISSION PLAN DID NOT VIOLATE THE FLSA....................................................................................10

EMPLOYMENT DISCRIMINATION AND WRONGFUL DISCHARGE DEVELOPMENTS

EMPLOYER FACES FEHA LIABILITY FOR SEXUAL ASSAULT BY INTOXICATED TRESPASSER..............................................................................................12

EMPLOYEE RESPONSIBLE FOR RETALIATION LOSES WRONGFUL DISCHARGE CLAIM .............................................................................................................14

FALSIFICATION OF OVERTIME WORK NEGATED AGE DISCRIMINATION CLAIMS.................................................................................................................................16

WORKERS’ COMPENSATION CASE BARRED SECOND SUIT UNDER FEHA.................17

NINTH CIRCUIT APPROVES BACK PAY “GROSS UPS” IN TITLE VII CASES...................18

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EMPLOYEE’S BONUS COULD NOT BE REDUCED BECAUSE OF MILITARY DUTY OBLIGATIONS...........................................................................................18

NURSE WAS FIRED FOR UNION ACTIVITY........................................................................19

ARBITRATION AGREEMENT FOUND UNENFORCEABLE DUE TO UNCONSCIONABILITY...........................................................................................20

2018 LEGISLATIVE ROUNDUP

GOVERNOR SIGNS STATE-WIDE BAN THE BOX LEGISLATION.....................................22

NEW LAW PROHIBITS SEEKING AND RELYING UPON SALARY HISTORY INFORMATION OF JOB APPLICANTS.................................................................................24

NEW PARENT LEAVE ACT SIGNED INTO LAW..................................................................25

LEGISLATION CREATES NEW LEAVE RIGHTS FOR MEMBERS OF STATE MILITARY RESERVE............................................................................................................28

HARASSMENT TRAINING MUST COVER GENDER IDENTITY, GENDER EXPRESSION, AND SEXUAL ORIENTATION......................................................................28

NEW BILL REQUIRES SEXUAL HARASSMENT TRAINING BY FARM LABOR CONTRACTORS......................................................................................................28

LAW PROHIBITING DISCRIMINATION AGAINST MEMBERS OF THE MILITARY OR NAVAL FORCES EXPANDED.........................................................................................29

FEHA AMENDED TO DELETE GENDER-SPECIFIC PRONOUNS......................................29

LABOR COMMISSIONER’S AUTHORITY OVER RETALIATION CLAIMS EXPANDED UNDER NEW BILL............................................................................................30

BILL MAKES BUILDING CONTRACTORS JOINTLY LIABLE FOR WAGE AND BENEFIT OBLIGATIONS OF SUBCONTRACTORS............................................................30

DIR INCREASES EXEMPTION RATES FOR COMPUTER EMPLOYEES AND PHYSICIANS................................................................................................................30

LEGISLATION REQUIRES EMPLOYERS TO IMPLEMENT CALIFORNIA’S “SANCTUARY STATE” POLICIES.........................................................................................31

IMMIGRATION STATUS DECLARED IRRELEVANT TO LIABILITY ISSUES UNDER CALIFORNIA LAW...................................................................................................33


MISCELLANEOUS DEVELOPMENTS

NEW STANDARD OF DEFERENCE TO UNFAIR LABOR PRACTICE CLAIM ONLY APPLIES PROSPECTIVELY ......................................................................................33

CITY’S LICENSING CONTRACTS MAY PROHIBIT WORK DISRUPTIONS AT AIRPORT................................................................................................................................34

NEW PUBLICATIONS

NEW WRONGFUL DISCHARGE MANUAL WILL BE AVAILABLE IN JANUARY..................35

NEW EDITION OF BOOK OF HUMAN RESOURCES FORMS OUT SOON.......................35 2018 EDITION OF WAGE AND HOUR MANUAL WILL BE AVAILABLE IN ELECTRONIC AND PRINT FORMATS.................................................................................36

16TH EDITION OF SEXUAL HARASSMENT TRAINING MANUAL AVAILABLE SOON.....................................................................................................................................37

LEAVES OF ABSENCE AND TIME OFF FROM WORK MANUAL UPDATED FOR 2018..............................................................................................................................38

EMPLOYEE HANDBOOK AND PERSONNEL POLICIES MANUAL AVAILABLE.................38

EMPLOYMENT DISCRIMINATION AND EEO PRACTICE MANUAL PUBLISHED..............39

SIMMONS’ PUBLICATION ON MEAL AND REST PERIOD RULES UPDATED TO ADDRESS SUPREME COURT’S AUGUSTUS V. ABM CASE.............................................40

NEW EDITION OF WARN-EMPLOYER’S GUIDE TO CALIFORNIA AND FEDERAL MASS LAYOFF AND PLANT CLOSING RULES.................................................40

2018 SEMINAR SCHEDULE

WAGE-HOUR, EMPLOYMENT DISCRIMINATION, WRONGFUL DISCHARGE, FAMILY LEAVE LAWS, AND EMPLOYEE HANDBOOK SEMINARS...................................41

PUBLICATIONS NOW AVAILABLE ELECTRONICALLY...............................................................41

ABOUT THE ALERT........................................................................................................................42


ALERT November 2017

ALERT November 2017

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WAGE AND HOUR DEVELOPMENTS

MINIMUM WAGE COMPLIANCE UNDER THE FLSA IS MEASURED ON A WORKWEEK STANDARD

Federal law requires that employees be paid no less than the minimum wage. On November 15, 2017, the Ninth Circuit Court of Appeals addressed a question of fundamental importance under the Fair Labor Standards Act of 1938 (“FLSA”) in Douglas v. Xerox Business Services, LLC, __ F.3d __ (9th Cir. 2017). The question is whether the relevant time unit used for determining minimum wage compliance is the workweek as a whole or each individual hour within the workweek. Based on the “powerful history of administrative and judicial decisions on the subject,” the Ninth Circuit joined other circuits in embracing the per-workweek approach.

1. Background

Two customer service representatives at call centers run by Xerox Business Services, LLC (“Xerox”), were responsible to answer incoming calls from Verizon Wireless customers and field questions. They also made outbound calls and performed call follow-up work. Their duties included various administrative tasks, such as attending trainings and meetings and monitoring work-related announcements and emails. Xerox had a complicated system for paying these employees for their activities.

At the end of each workweek, Xerox identified amounts earned for defined activities and for activities paid at variable rates. It then divided that total by the number of hours worked that week. If the resulting hourly wage equaled or exceeded the minimum wage, Xerox did not pay the employee anything more. However, if the ratio fell below the minimum wage, Xerox gave

the employee “subsidy pay” to bump the average hourly wage up to minimum wage. In this way, subsidy pay ensured that from the perspective of each workweek, employees always received the appropriate hourly minimum wage.

2. The Lawsuit

The two employees brought an action, alleging that Xerox’s payment plan violates the FLSA’s minimum wage and overtime provisions. They claimed that the FLSA measures compliance on an hour-by-hour basis and does not allow averaging over a longer period. Because Xerox averaged across a workweek, they argued that it compensates above minimum wage for some hours and below minimum wage for others, thereby violating the FLSA.

The district court disagreed. It held that workweek averaging was appropriate and that Xerox did not violate the FLSA. The Ninth Circuit agreed.

3. The Ninth Circuit’s Analysis

The Ninth Circuit found that the issue presented was a pure question of statutory interpretation – When gauging compliance with the FLSA’s minimum wage provision, is it permissible to use the workweek as the unit of measure? The Ninth Circuit found that the statutory text of the FLSA was unilluminating and did not preclude either the per-hour nor the per-workweek measure. It then examined the interpretations of the U.S. Department of Labor, the agency charged with administering the FLSA. The DOL had established the workweek as the measuring rod for compliance just over a year after the FLSA was passed in 1938, and never changed that view.

The court then recognized that the Second, Fourth, Eighth, and D.C. Circuits have embraced the per-workweek construction. Noting the preference for national uniformity, it concluded that the workweek standard was the correct

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standard. It observed that Xerox’s payment plan compensates employees for all hours worked by using a workweek average to arrive at the appropriate wage. Under the workweek standard, Xerox complied with the minimum wage provision. Thus, even if the employees were confused by Xerox’s payment plan, they still received the floor guaranteed by the minimum wage.

GIANTS SUCCESSFULLY CHALLENGE “FINAL” PAY CLAIMS BASED ON CBA AND FEDERAL PREEMPTION

Even though state and local governments can establish wage and hour rules, they must occasionally yield to federal laws, as explained in Melendez v. San Francisco Baseball Associates, LLC, 2017 D.J. 10067 (Oct. 17, 2017). In successfully defending the San Francisco Baseball Associates LLC (the Giants), Sheppard Mullin argued that arbitration of the wage-hour dispute was required by federal law set out in Section 301 of the Labor Management Relations Act (“LMRA”). Sheppard Mullin also asserted the Giants’ claim that federal law preempted the employee’s state law claims for “final pay” and required dismissal of the action.

1. Background

The lawsuit was initiated by a plaintiff, Melendez, who worked as a security guard for the Giants at AT&T Park. He claimed that he and other security guards were employed “intermittingly” for specific job assignments and were discharged “at the end of” each event, such as the end of each homestand, baseball season, and inter-season event, like a fan fest, college football game, concert, or series of shows. He thus argued that he and other security guards were entitled to receive immediate payment of their “final wages” upon each such “discharge.” The Giants disputed the security guard’s claims and countered that the terms of the collective bargaining agreement (“CBA”) did not anticipate a “discharge” after each such event such that payment was required immediately thereafter.

Under the CBA, security guards are not intermittent employees but are “year round employees who remain employed with the Giants until they resign or are terminated” for cause pursuant to the CBA.

The Giants moved to compel arbitration under the CBA or to dismiss the state law action on the ground that the action is preempted by Section 301 of the LMRA. The trial court rejected these arguments, but the court of appeal agreed with the Giants. The court concluded that arbitration is required by the LMRA. It also found that federal preemption applied; thus, the dispute must be resolved pursuant to the grievance procedure under the CBA.

2. The Relevant Provisions Of The CBA

Melendez worked as a security guard since March 2005 as a member of the union. His CBA defines several classifications of employees, including “regular” employees, “seasonal” employees, “senior seasonal” employees, and “super senior seasonal” employees. These classifications were based, in part, on the number of hours employees worked each year.

Security personnel must meet specific qualifications. For example, they must obtain a valid California guard card and are subject to a background check and pre-hire drug screening. They are subject to discipline only for cause and are entitled to overtime pay for various holidays recognized throughout the year.

Notably, the security guards do not turn in their uniforms or badges at the end of each homestand or baseball season, do not reapply for work or submit new-hire paperwork at the beginning of each homestand or baseball season, and need not undergo security background checks at the beginning of each homestand or baseball season. Furthermore, the Giants do not terminate security guards at the end of each homestand or baseball season. On the contrary, they remain on the

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Giants’ payroll between homestands and baseball seasons, unless their employment otherwise ends as a result of a resignation or pursuant to the CBA. The court observed that many security guards, including Melendez, “regularly work between baseball seasons or year-round.” In fact, “he worked every pay period in 2015 and 2016, often working almost as many hours in the off-season as those during the baseball season.”

3. The Lawsuit

Melendez filed the lawsuit without having invoked the grievance procedures specified in the CBA. He alleged that he was hired “intermittently during the baseball season and throughout the rest of the calendar year” and that the Giants failed to comply with Labor Code Section 201 in at least three ways. (a) At the end of the baseball season, it did not pay intermittently employed persons on the last day they worked during the season. (b) During the baseball season, they did not immediately pay intermittently employed employees on the last day they work during a homestand. (c) Between baseball seasons, when intermittently employed persons are employed for events such as concerts, college football games, theatrical performances, fan appreciation days, a run of Cirque du Soleil shows, etc., they do not immediately pay intermittently employed employees at the end of their work at these events.

4. The LMRA Requires That The Dispute Be Arbitrated

Sect ion 301 preempt ion law was summarized as follows: “If the plaintiff’s claim cannot be resolved without interpreting the applicable CBA . . . it is preempted. . . . If the claim may be litigated without reference to the rights and duties established in the CBA . . . [and] plainly is based on state law, it is not preempted, even if the defendant refers to the CBA in mounting a defense.” Levy v. Skywalker Sound, 108 Cal.App.4th 753 (2003). The test of whether preemption applies is: “Does the application of state law require

the interpretation of a collective bargaining agreement, or substantially depend upon analysis of the terms of the agreement made between the parties in a labor contract?”

Melendez sought penalties under Labor Code Section 203 (the “waiting time penalty” statute) on the ground that the Giants allegedly violated the final pay requirements in Labor Code Section 201 by failing to pay security guards immediately after the termination of each instance of what he described as “intermittent employment”. Section 201(a) begins: “If an employer discharges an employee, the wages earned and unpaid at the time of the discharge are due and payable immediately.”

The Giants argued that it does not “discharge” its security guards after every game, homestand, baseball season or event at which the guards worked. Rather, the guards remain employed under the provisions of the CBA, subject to scheduling by the Giants, unless and until a guard resigns or is terminated for cause under the terms of the CBA. The Giants effectively distinguish the Supreme Court decision in Smith v. Superior Court, 39 Cal.4th 77 (2006), on the basis that, unlike the hair model that sued in that case, the security guards are not hired “for a particular job assignment or time duration.”

5. The Preemption Issue

The trial court rejected the preemption argument. It held that resolution of the controversy did not require interpretation of the CBA, but simply a determination of whether the security guards are discharged within the meaning of Labor Code Section 201 at the conclusion of an event or series of baseball games. The court observed that the dispute could be resolved without interpretation of any specific language in the CBA.

The court of appeal disagreed. While resolution of the controversy may not turn on the interpretation of any specific language in the CBA,

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it did not follow that the meaning of the CBA is irrelevant to the outcome of the dispute. The underlying legal issue was whether the security guards were “discharged” within the meaning of Labor Code Section 201. In order to determine whether the conclusion of a baseball game, season or other event constitutes a discharge, it is necessary to first determine the terms of employment.

The Model In The Smith Case Worked On Only One Day

In Smith, the hair model was hired for only a single day’s work, so that when the day ended her employment terminated and she was therefore discharged within the meaning of the statute. Here, because the plaintiffs were union members, the terms of their employment were governed by the CBA. The court determined that it “is essential to determine, therefore, whether the CBA provides for employment of security guards for only a single game, homestand, season or other event, or whether the agreement contemplates extended employment from season to season, event to event, year to year, recognizing that not every day will be a day of work. If the latter, there is no termination of employment, and therefore no ‘discharge,’ at the conclusion of each baseball game, homestand, season, or other event.” Even though no provision of the CBA provided an explicit answer, the duration of the employment relationship must be derived from what is implicit in the agreement.

The CBA Provisions

The court found numerous provisions from which inferences may logically be drawn. The classification of employees is based on the number of hours worked in a year, itself suggesting that employment is considered to continue beyond the conclusion of each event. Continued classification as a “regular” employee requires at least 1,700 hours of work in a year. Likewise, pre-hire drug screening and background investigations occur only once prior to the start of a single employment and the specification of holidays in the CBA implied

year-long employment. Additionally, the Giants had the right to discharge an employee only for cause.

In short, resolution of the controversy – in determining whether and when a “discharge” has taken place – required interpretation of the scope of employment under the CBA. The court summarized its conclusion regarding preemption as follows: “Since in this case application of Labor Code § 201 necessarily ‘requires the interpretation of [the CBA] and substantially depends upon analysis of its terms [citation], federal preemption applies.’” Consequently, “the dispute must be resolved pursuant to the grievance procedure and arbitration under the CBA.” The court of appeal reversed the order of the trial court denying the motion to compel arbitration and dismissed the state law action.

SUPREME COURT’S PAGA DISCOVERY DECISION IMPLEMENTED

Earlier this year, the California Supreme Court examined the discovery rights that exist under the Private Attorneys General Act of 2004 (“PAGA”) in Williams v. Superior Court, 3 Cal.5th 531 (2017). It concluded that plaintiffs in PAGA actions are entitled to receive information that can be used to contact current and former employees. The Supreme Court then returned the case to the court of appeal to implement its decision. On November 15, 2017, the court of appeal issued its own decision in Williams v. Superior Court, _____ Cal.App.5th _____ (2017), and directed the trial court to enter an order granting discovery of the names and contact information of the employer’s non-exempt California employees employed since March 22, 2012.

DUE TO ITS STRONG COMPLIANCE EFFORTS, EMPLOYER PREVAILS IN MEAL AND REST PERIOD CASE

In Manigo v. Time Warner Cable, Inc., Case No. 2:16-cv-06722-JFW-PLA (C.D. Cal. Oct. 17, 2017), a federal court granted the employer’s

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motion for summary judgment of a meal and rest period case. In doing so, the court discussed the employer’s strong compliance efforts and provided a potential “compliance roadmap” other employers may want to consider.

1. Background

The six plaintiffs worked as dispatchers for Time Warner Cable at its El Segundo, California location. In this capacity, they were responsible for routing and dispatching cable installation technicians to customer residences. The plaintiffs filed suit, alleging they were denied meal and rest periods. After earlier defeating the plaintiffs’ request to certify the case as a class action, Time Warner filed a motion for summary judgment as to the plaintiffs’ remaining individual claims.

2. The Employer’s Motion

In its motion, Time Warner highlighted its extensive efforts to ensure meal and rest period compliance under the law. It’s efforts included:

• The publication of legally compliant meal and rest period policies.

• Its regular practice of paying one-hour meal and rest period premiums to employees who notified management of a missed break. Notably, the plaintiffs had received such payments on 34 occasions during the relevant time period.

• Setting up its timekeeping system to automatically pay premiums whenever an employee clocked out for a meal period after the fifth hour of work.

• Regularly training employees about the meal and rest period policies.

• Coaching and disciplining employees where they failed to follow the meal and rest period policies.

• Drafting written schedules for all meal periods.

• Paying bonuses to dispatchers who consistently fol lowed their work schedules, including their meal period schedules.

Based on these facts, Time Warner argued it had met its legal obligation to provide the dispatchers with a reasonable opportunity to take compliant meal and rest periods.

In response, the plaintiffs argued their time records demonstrated they sometimes failed to clock out for timely meal periods of at least 30 minutes. However, other than testimony about purported work flow issues that the court described as “vague and conclusory,” the plaintiffs were not able to bring forward evidence explaining why they were allegedly forced to take a late or short meal period on any specific occasion. Similarly, they could not recall any specific incidents where rest periods were denied them. The court determined the plaintiffs had failed to submit evidence in support of their claims and, therefore, granted Time Warner’s motion.

3. Conclusion

California’s meal and rest period rules are sometimes confusing and difficult to enforce. They also often lead to litigation. Accordingly, robust meal and rest period compliance efforts are recommended for all businesses. While the steps Time Warner took in the Manigo case may not work for every employer, they certainly provide a good example of a successful compliance strategy.

EMPLOYER DECERTIFIES FLSA COLLECTIVE ACTION OF BANK EMPLOYEES

In Barker v. U.S. Bancorp, Case No. 3:15-cv-01641-CAB-WVB (S.D. Cal. Oct. 2, 2017), a federal court recently found that a nationwide class of bank managers could not proceed on a

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collective basis. This was a significant victory for the employer.

1. Factual Background

The plaintiffs worked as “In-Store Branch Managers” for U.S. Bank. They were classified as exempt from overtime under the Fair Labor Standards Act (“FLSA”) due to their management responsibilities. They claimed that all Branch Managers in the United States were misclassified because they allegedly spent most of their time performing non-managerial duties similar to those performed by hourly bank tellers. During the relevant time period, U.S. Bank employed approximately 1,486 Branch Managers in the U.S.

2. U.S. Banks’ Motion For Decertification

Based on an earlier, preliminary motion, the court had tentatively approved the plaintiffs’ request to proceed on behalf of other Branch Managers in a “collective action” under the FLSA. (Although key differences exist, an FLSA collective action is similar to a class action in many respects.) After the parties completed significant discovery – including the depositions of the two named plaintiffs and numerous other Branch Managers – U.S. Bank filed a motion asking the court to “decertify,” or undo its prior decision to allow the case to proceed on a collective basis.

a. The Bank’s Arguments

U.S. Bank argued the deposition testimony demonstrated that different Branch Managers performed their jobs in markedly different ways based on where they worked, the expectations of their particular supervisor, the number and experience of the junior staff they supervised, and the clientele their particular branch served. U.S. Bank also highlighted that Branch Managers described their day-to-day work experiences very differently from each other in the LinkedIn profiles that they themselves had drafted. The bank further

pointed to customer transactions reports, which showed that Branch Managers spent widely varying amounts of time performing non-exempt teller duties, if any at all.

The plaintiffs, on the other hand, relied primarily on 29 declarations from Branch Managers and a collection of bank staffing policies which allegedly “forced” Branch Managers to engage in non-exempt duties during a majority of their time.

b. The Court’s Findings

Upon reviewing the evidence, the court was less than impressed with the plaintiffs’ showing. It described the plaintiffs’ declarations as “2-3 page ‘fill-in-the-blank’” statements, where the “only information that changes between declarations is the name, branch location, number of hours worked, and employment dates of the declarant.” Rejecting the plaintiffs’ “boilerplate statements,” the court agreed with U.S. Bank that individualized, person-by-person inquiries would be required to determine if any particular Branch Manager was improperly classified as exempt under the FLSA. Because these inquiries could not be managed for hundreds of employees in a single trial, the court granted U.S. Bank’s motion and decertified the collective.

3. Conclusion

Cases alleging misclassification under the FLSA are filed every day in California and throughout the United States. As in Barker, these cases are commonly filed as collective or class actions where hundreds or thousands of employees are potentially involved. To help avoid potentially costly and disruptive litigation, all employers should regularly evaluate their exempt classification practices with the assistance of experienced counsel.

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EMPLOYER PREVAILS IN “BAG CHECK” CASE

In Chavez v. Converse, Inc., Case No. 5:15-cv-03746-NC (N.D. Cal. Oct. 11, 2017), a federal district court discussed a commonly-asserted claim in California courts: Whether employees must be paid for brief amounts of time spent undergoing “bag” or “security” checks, or whether such time is not compensable under the “de minimis” doctrine. Here, the court ruled firmly on the side of the employer and dismissed the case.

1. Background

Like many retail employers, Converse requires its employees to be inspected by a manager before leaving the store. The plaintiff (Chavez) worked for several years at a Converse location in Gilroy, California. During his employment, Chavez was subject to bag checks. Because Converse’s time clocks were in the back of the store, Chavez would first clock out and then walk to the front of the store for any bag check. If Chavez was not carrying a bag, he was subject to only a “visual inspection.” However, if he was carrying a bag or other container big enough to hold merchandise, it was actively inspected. Moreover, since bag checks could only be completed by management, Chavez and other employees sometimes had to wait for a manager to become available before exiting the store. All such activities were completed while off the clock.

2. The Motion For Class Certification Was Granted

Based on the above facts, Chavez filed a proposed class action lawsuit seeking to represent all hourly employees at Converse’s 20 California locations. In an earlier decision, the Court granted Chavez’s request to pursue his bag-check claim on a class basis.

3. The Employer Moved For Summary Judgment Based On The De Minimis Doctrine

Converse moved for summary judgment. To support its motion, Converse submitted a time-and-motion study completed by an expert statistician. Converse’s expert reviewed 436 exit inspections to determine how long they took. The expert found that the average time spent by employees undergoing the bag check process, including any time spent waiting for a manager to be available, was a mere 9.2 seconds per inspection.

Based on this finding, Converse argued that employee bag check time was not compensable under the de minimis doctrine, which first arose under federal law to shield employers from having to pay for trivial amounts of off-the-clock work. Courts consider three factors when deciding whether to apply the doctrine: (1) whether recording the time would be administratively difficult from a practical perspective; (2) the aggregate amount of the time in question; and (3) the regularity of the off-the-clock work.

In connection with the motion, the court had to decide two key questions. First, whether the de minimis doctrine is even available under California law. Second, if so, whether it should apply in Chavez’s case.

a. The Court Decided That The De Minimis Doctrine Applies In California

The California Supreme Court has never definitively held that the de minimis doctrine can be used when deciding claims under California law. The issue is currently pending before the Supreme Court in a case called Troester v. Starbucks Corp., Case No. S234969. However, in a straightforward analysis, the court held that because the Ninth Circuit Court of Appeals had already concluded that the de minimis doctrine applies to claims raised under California law, it was bound to reach the same conclusion.

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b. Converse Wins Under The De Minimis Doctrine

Next, the Chavez Court examined whether the de minimis doctrine applied to the facts at hand. The court noted there was a factual dispute concerning the time employees spent engaging in bag checks. Converse’s expert had calculated an average time of 9.2 seconds per inspection. However, the plaintiffs’ expert found that the average time spent per check was 114 seconds (i.e., just under two minutes). To complete his analysis, the plaintiffs’ expert did not actually watch any actual bag checks, however. Instead, he reviewed deposition transcripts from 12 of the 23 class members who testified concerning their bag check experiences. In a somewhat unusual move, the court performed its own analysis of all 23 employee depositions and found that the “testimony regarding bag check and visual inspection durations fairly correlates with the … findings” of Converse’s expert. Thus, the court appeared convinced that Converse had engaged in a more rigorous study.

The court also agreed with Converse that it would be impractical to move its time clocks up to the front of the store. Although taking this step might make it easier for employees to clock out after they had already completed a bag check, it would also mean that employees would be required to clock out in front of customers, which would raise employee privacy concerns. In addition, Converse did not want time clocks to be on the sales floor where customers could access them, a concern the court found was legitimate.

Similarly, the court found that Converse had the better argument when considering the aggregate amount of time at issue. Even if the plaintiff’s “114-second” analysis were credited, the cumulative time involved each day would still be less than 10 minutes, a time period which numerous other courts have already concluded is de minimis. Accordingly, the court found that Converse was entitled to judgment as a matter of law.

4. Conclusion

Chavez provides employers a good example of how to successfully defend against a bag-check case. Of course, avoiding such litigation altogether would be preferable. If your business uses a security check process, we recommend consulting with your labor counsel to discuss proactive ways to improve wage-and-hour compliance.

EMPLOYER WINS PAY STUB CLAIMS AT CLASS ACTION TRIAL

As regular readers of the ALERT know, wage statement (i.e., pay stub) claims under the California Labor Code are often filed as proposed class actions. Class action cases rarely go to trial because they are typically resolved pursuant to a pre-trial motion, a settlement, or by other means. Indeed, the California Supreme Court has previously noted that class action trials are “an exceedingly rare beast.” Recently, however, the parties to Guillen v. Dollar Tree Stores, Inc., Case No. 2:15-cv-03813 (C.D. Cal. 2017), proceeded to a jury trial in federal court in a pay stub class action.

The plaintiff, Francisca Guillen, formerly worked at a Dollar Tree store. Guillen claimed that she and approximately 5,400 other Dollar Tree employees were improperly required to print out their pay stubs on store cash registers. According to the plaintiff, this practice violated Dollar Tree’s obligations under Labor Code Section 226 to “furnish … accurate itemized statements” to employees.

For its part, Dollar Tree argued that allowing employees to print out their pay stubs at work was convenient (particularly for employees who did not have printers at home), and that all information on the register pay stubs was accurate in any event. Dollar Tree also noted that employees could receive paper copies of their pay stubs in the mail by requesting them through a company telephone number.

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plaintiff argued that an employee may recover penalties under the PAGA without any such showing. Instead, to recover PAGA penalties, the employee need only show that a pay stub lacks required information without any showing of intent.

Based on its reading of the plain language of the statutes involved, as well as their legislative history, the court determined that the plaintiff’s argument was correct. The court supported its ruling by noting that several federal courts considering the same question have likewise concluded that an employee is not required to establish a knowing and intentional pay stub violation in order to recover PAGA penalties. Although these cases were not binding in the California Court of Appeal, they were nonetheless persuasive. Accordingly, the court held that the plaintiff’s claim for PAGA penalties had been improperly dismissed.

3. Silver Lining For The Employer?

Although the employer lost the appeal, the court offered up a significant silver lining in its holding. It noted that while PAGA penalties were available to the plaintiff due to the pay stub error, the trial court nonetheless had authority under the PAGA to use its discretion to reduce any such award that is “unjust, arbitrary and oppressive, or confiscatory.” The court then acknowledged that PAGA penalties may not be warranted in this instance given the employer’s intent to comply with the law, its prompt correction of the error once discovered, and the absence of any actual harm to an employee.

4. Conclusion

Given the sheer number of pay stub claims that are filed in California, employers are strongly advised to have their wage statements periodically reviewed for compliance with the Labor Code.

The jury sided with Dollar Tree, finding that it fully complied with its pay stub obligations. While one case is hardly evidence of a trend, it suggests that more employers may be willing to take class action cases to trial, despite the financial risks involved. This may be especially true where, as in Guillen, the plaintiff challenges an employment practice that seems employee-friendly on its face.

EMPLOYEE NEED NOT SHOW A “KNOWING AND INTENTIONAL” VIOLATION OF THE PAY STUB STATUTE TO RECOVER PAGA PENALTIES

In Lopez v. Friant & Associates, Case No. A148849 (Sept. 26, 2017), the California Court of Appeal issued a ruling in another one of the seemingly never-ending wave of lawsuits relating to Labor Code Section 226 – the wage statement (i.e., pay stub) statute and the Private Attorneys General Act (“PAGA”).

1. Background

The plaintiff filed a lawsuit for civil penalties under the PAGA claiming that his employer had violated Labor Code Section 226 by issuing pay stubs which did not include either the last four digits of the employee’s social security number or an employee identification number. The employer acknowledged the pay stubs lacked this information, but claimed the omission was an unintentional oversight. Based on this argument, the trial court granted the employer’s motion for summary judgment and dismissed the case. The plaintiff appealed.

2. The Court Of Appeal Disagreed With The Trial Court

In his appeal, the plaintiff noted that his lawsuit was brought under the PAGA and not under Labor Code section 226. The plaintiff acknowledged that an employee may only recover penalties under section 226 for a “knowing and intentional” violation. In contrast, however, the

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DEDUCTION OF DRAW FROM FUTURE EARNINGS UNDER COMMISSION PLAN DID NOT VIOLATE THE FLSA

In Stein v. Hhgregg, Inc., _____ F.3rd _____ (6th Cir. 2017), the Sixth Circuit Court of Appeals examined a commission program under the Fair Labor Standards Act of 1938 (“FLSA”). Under the employer’s compensation policy, sales employees are paid solely on the basis of commission, and are advanced a “draw” to meet the minimum wage requirements whenever their commissions falls below the minimum wage. The amount of the draw is then deducted from future earnings in weeks when the employees’ commissions exceed the minimum wage requirements.

Two employees brought an action against the employer, claiming violations of the FLSA and state law. The district court found that the compensation policy was legal and dismissed the employees’ federal claims. The Sixth Circuit agreed that the policy was lawful in most respects, but was questionable in the way it allowed recoveries when employees separated. It therefore reversed the judgment and returned the case to the district court for further proceedings.

1. The Draw Policy

a. The Draw Was Used To Meet The Minimum Wage Standard

The employer operates over 220 stores across the United States that sell appliances, furniture, and electronics. All sales employees are subject to a “draw-on-commission policy.” Under the policy, they are paid solely on the basis of commissions. However, in pay periods when an employee’s earned commissions fall below the minimum wage, he or she is paid a “draw” to meet the minimum requirements. Draw payments are calculated on a weekly basis. An employee receives a draw only if the commissions earned that week fall below the minimum wage (in a non-overtime week) or one and one-half times the minimum wage (in an overtime week).

b. Repayment Of Draw

The employees argued that those who receive a draw are required to repay it, “typically … by deducting the amount of the draw from commissions earned during the very next week, assuming the commissions after the deducted draw repayment exceed the minimum wage obligation for that week. Thus, if the weekly minimum wage were assumed to be $290, and an employee earned only $100 in commissions in one week, he would receive a draw of $190 to meet the minimum wage of $290. However, if the following week he earned $600 in commissions, he would receive only $410, and the remaining $190 would be credited back to the company to repay the $190 draw from the previous week. The employees alleged that if the subsequent week’s commissions are insufficient to repay the draw, the employer deducted the amount of the outstanding draw from the next paycheck the employee received for a week in which the employee’s commissions minus the outstanding draw exceed the applicable minimum wage. In addition, employees are subject to discipline if they received frequent draws or accumulated too great of a draw balance. The policy stated that upon termination of employment, employees would immediately pay the company any unpaid deficit amounts.

c. The DOL Standard

The U.S. Department of Labor (“DOL”) recognizes the draw-on-commission pay structure as a potential method of compensation for retail sales employees in 29 C.F.R. § 779.413(a)(5). The program in dispute, however, differed because unlike a typical draw system that pays a fixed amount as a draw in each pay period, the amount of the draw paid under the employers policy varies from week to week. In addition, the company’s policy bases the draw not on expected commissions, but on the minimum wage.

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2. The Sixth Circuit’s Analysis

The Sixth Circuit concluded that the employees failed to allege sufficient facts demonstrating that the employer’s practice of deducting the amount of the draw from future earnings violated the FLSA. However, it also concluded that they alleged sufficient facts to demonstrate a violation where the compensation policy held employees liable for any unearned draw payments upon termination for any reason.

a. The “Free And Clear” Regulations

The Sixth Circuit determined that the compensation policy was lawful. It referenced the DOL regulations which state that when an employee earns less in commissions than he was advanced through a draw, “a deduction of the excess amount from commission earnings for a subsequent period, if otherwise lawful, may or may not be customary under the employment arrangement.” The employees countered that the deductions from commission earnings were not “otherwise lawful,” because the employer failed to deliver the minimum wage “free and clear” as required by 29 C.F.R. § 531.35.

The FLSA mandates that employers pay employees a statutory minimum hourly wage, which is currently set as $7.25 an hour, or $290 a week for an ordinary 40 hour workweek. The DOL regulations require that the minimum wage be paid “finally and unconditionally or free and clear.” Therefore, the requirements are not met where the employee “kicks-back” directly or indirectly to the employer part of the wages delivered.

The employees argued that the employer failed to deliver wages “free and clear,” because any draw amount paid to meet the minimum wage was deducted from future paychecks. They characterized the draw as “nothing more than a loan” that sales employees are then expected to repay, or arguably, “kick-back” to the employer. The Sixth Circuit noted that the question before

it was whether recovery of the draw was an unlawful kick-back. It construed the term “kick back” as “a return of a portion of a monetary sum received, usually as a result of coercion or a secret agreement. Under the system, if an employee is paid a draw, she may keep the full amount that is paid and “delivered.” However, deductions will be made from wages not delivered, that is, from future earned commissions that have not yet been paid. Because the employer’s practice of deducting draw payments from future commission earnings does not unlawfully kick back, directly or indirectly to the employer or to another person for the employer’s benefit the whole or part of the wage delivered to the employee, the Sixth Circuit held that this practice did not violate the “free and clear” regulation.

The court also recognized that the DOL Field Operations Handbook (“FOH”) indicates that the FLSA permits employers to “credit … draw or guarantee payments against their minimum wage obligation when settling out the amount due employees at the end of the pay (settlement) period.” FOH § 30b05(c)(3). The FOH makes it clear that the DOL views the employer’s practice of crediting draws against future earnings as permissible under the FLSA, so long as the employer does not deduct from wages already paid.

3. Conclusion

The Sixth Circuit held that the employees failed to state a claim that the policy of deducting draw payments from future unpaid earned commissions violates the minimum wage and overtime requirements of the FLSA. On the other hand, the employees did allege sufficient facts to support their claim that the employer violated the FLSA by continuing to hold employees liable for draw payments even upon termination. It therefore reversed the district court’s dismissal of the case insofar as the employees alleged that the policy of holding employees liable upon termination violated the FLSA.

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not a guest of the hotel, walking around the hotel property with a beer in his hand (the trespasser). The engineering manager saw the trespasser in several locations on different floors, but did not ask the trespasser to leave. The manager also did not report the trespasser’s presence to housekeeping management or to the police department.

The trespasser approached housekeepers cleaning hotel rooms three times while walking around the property. On the first occasion, he asked a housekeeper to use the restroom. He made sexually harassing comments to the housekeeper, showed her a hand full of five dollar bills, and offered her money in exchange for sexual favors. A maintenance worker overheard the comments and helped the housekeeper persuade him to leave the room.

On the second occasion, the trespasser tried to enter a hotel room on the third floor of another building. He offered the housekeeper who was cleaning the room money for sexual favors. The housekeeper closed the door on the trespasser and reported the incident to housekeeping management.

A housekeeping manager broadcasted the trespasser’s activities and location to other housekeeping managers. The manager then went to one of the buildings to check on the safety of the housekeepers, but did not go to the building where the second incident occurred because M.F.’s supervisor was assigned to that building. M.F.’s supervisor checked the first floor of the building, but did not check the second floor, where M.F. was working.

On the third occasion, the trespasser went to the hotel room M.F. was cleaning. He confronted her and blocked her exit. After she refused his request to close the blinds and tried to get past him, the trespasser punched her in the face, knocking her out.

EMPLOYMENT DISCRIMINATION AND WRONGFUL DISCHARGE

DEVELOPMENTS

EMPLOYER FACES FEHA LIABILITY FOR SEXUAL ASSAULT BY INTOXICATED TRESPASSER

The California Fair Employment and Housing Act (“FEHA”) prohibits discrimination and sexual harassment. The responsibilities that the FEHA imposes upon employers can vary depending upon whether a sexual harassment claim is levelled against an employee or a nonemployee.

In the October 26, 2017 decision in M.F. v. Pacific Pearl Hotel Management LLC, ___ Cal.App.5th ___ (2017), a California Court of Appeal examined a FEHA claim by a housekeeping employee who sued her hotel employer as a result of a sexual assault by a nonemployee. The employee alleged facts showing: (1) she was raped while working on the employer’s premise by a drunk nonemployee trespasser; (2) the employer knew or should have known the trespasser was on the employer’s premises for about an hour before the rape occurred; and (3) the employer knew or should have known that, while on the employer’s premises, the trespasser had aggressively propositioned at least one other housekeeping employee for sexual favors. The court concluded that the facts were sufficient to state claims under the FEHA for sexual harassment by a nonemployee and for failure to prevent such harassment. It therefore reversed the superior court’s determination to the contrary.

1. Background

The court was required to accept as true the allegations in the employee’s complaint for purposes of analyzing the appeal. The employee, M.F., worked for Pacific Pearl Hotel Management, LLC (“Pacific”) as a housekeeper at its five-building hotel property. One morning, the hotel’s engineering manager saw a drunk man, who was

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When M.F. regained consciousness, the blinds were closed and the trespasser was raping her on the hotel room bed. He sexually harassed, assaulted, battered, and sodomized her for over two hours. During that time, her cleaning cart remained outside the hotel room, the blinds remained closed, and no one from the hotel came looking for her.

M.F. used the hotel room phone to call housekeeping for help, but no one answered. She then called the police department, who responded and rescued her. She went to a hospital, where she remained for weeks.

2. The Lawsuit

M.F. sued Pacific (a) for hostile work environment sexual harassment and (b) for failure to prevent sexual harassment. She alleged that Pacific violated the FEHA by allowing the trespasser to sexually harass her and by failing to take reasonable steps to prevent the sexual harassment from occurring.

Pacific moved to dismiss the case on the ground that the complaint failed to state a cause of action. It argued M.F. had not pleaded sufficient facts to show Pacific knew or should have known about any conduct by the trespasser requiring action by Pacific or putting Pacific on notice a sexual assault might occur. Consequently, Pacific argued the complaint did not state viable claims under the FEHA and the claims were barred by the worker’s compensation exclusivity doctrine. The superior court agreed with Pacific’s position.

3. Legal Analysis

The Exclusive Remedy Rule

The court began its discussion by examining the hotel’s argument that workers’ compensation was the only remedy an employee could pursue against her employer for a workplace injury under Labor Code § 3602(a). In discussing the “exclusivity” doctrine, the court noted that the

general rule that workers’ compensation benefits provide the exclusive remedy for an employee includes claims for injuries by an employer’s negligent or reckless failure to provide adequate premises security despite knowledge of danger to its employees. It explained that the underlying premise behind this statutorily-created system is the “compensation bargain.” Pursuant to this presumed bargain, the employer assumes liability for industrial personal injury or death without regard to fault in exchange for limitations on the amount of that liability. The employee is afforded relatively swift and certain payment of benefits to cure or relieve the effects of industrial injury without having to prove fault but, in exchange, gives up the wider range of damages potentially available in tort.

Pacific did not dispute that the workers’ compensation exclusivity doctrine is inapplicable to claims under the FEHA. Consequently, if the complaint stated viable claims against Pacific under the FEHA, the workers’ compensation exclusivity doctrine did not bar M.F.’s claims.

The superior court agreed with Pacific’s position and dismissed the complaint.

Actions Of Nonemployees

The court next examined the applicability of the FEHA to sexual harassment claims asserted based on the actions of nonemployees. The FEHA provides: “An employer may . . . be responsible for the acts of nonemployees, with respect to sexual harassment of employees . . . , where the employer, or its agents or supervisors, knows or should have known of the conduct and fails to take immediate and appropriate corrective action. In reviewing cases involving the acts of nonemployees, the extent of the employer’s control and any other legal responsibility that the employer may have with respect to the conduct of those nonemployees shall be considered.” The FEHA also makes it unlawful “for an employer . . . to fail to take all reasonable steps necessary to prevent . . . harassment from occurring.”

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The Need For Remedial Measures

Pacific argued that the employee failed to state viable claims under the FEHA because she did not and could not allege facts showing Pacific knew the trespasser posed a risk to housekeeping employees before he appeared on the hotel property and began harassing them. The court dismissed this argument, noting that the fact that Pacific may not have had any responsibility under the FEHA before the trespasser appeared on the hotel property did not preclude Pacific from having such responsibilities after the trespasser appeared, particularly after the trespasser began confronting and aggressively propositioning housekeeping employees for sexual favors. Citing an earlier decision, the court stated: “Once an employer is informed of the sexual harassment, the employer must take adequate remedial measures. The measures need to include immediate corrective action that is reasonably calculated to (1) end the current harassment and (2) deter future harassment. The employer’s obligation to take prompt corrective action requires (1) that temporary steps be taken to deal with the situation while the employer determines whether the complaint is justified, and (2) that permanent remedial steps be implemented by the employer to prevent future harassment.”

Finally, Pacific contended that even if it had some responsibility to M.F. under the FEHA, it fulfilled its responsibility by providing a reasonable and adequate response. The court explained that whether an employer sufficiently complied with its mandate to “take immediate and appropriate corrective action” is a question of fact that requires the consideration and weighing of evidence. It therefore was unsuitable to resolve the issue by a motion to dismiss.

The court thus reversed the decision and returned the case to the superior court for further proceedings consistent with its decisions. It also awarded M.F. her appeal costs.

4. Conclusion

The M.F. decision is important on several fronts. First, it notes that the exclusivity provisions of the workers’ compensation law do not bar claims of sexual harassment under the FEHA. Second, the case emphasizes that employers have responsibilities to employees that extend to sexual harassment by nonemployees, as well as harassment by employees. While the standards applied to cases involving harassment by nonemployees may differ somewhat from those applicable to claims that accuse employees of harassment, the obligations are substantial. Third, the FEHA creates an obligation to prevent harassment. In examining their obligations under California Law, employers are well advised to consider the significance and breadth of the court’s Pacific Pearl decision.

EMPLOYEE RESPONSIBLE FOR RETALIATION LOSES WRONGFUL DISCHARGE CLAIM

California law provides that employment relationships are terminable at will in the absence of an express or implied agreement that they may be terminated only for good cause. In the October 5, 2017 decision in Jameson v. Pacific Gas and Electric Co., _____ Cal.App.5th _____ (2017), a California Court of Appeal considered these principles in the context of an employee’s claim for wrongful termination. The employee (Jameson) alleged that his employer (PG&E) fired him in violation of an implied-in-fact employment contract not to terminate his employment without good cause. PG&E defeated his claims and obtained summary judgment.

The court of appeal held that, regardless of whether Jameson was an at-will employee, PG&E established it had good cause to terminate him. It relied on an investigation that concluded that Jameson had retaliated against a subordinate employee for raising safety issues. The court devoted considerable attention to the relevance

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Jameson were permitted to continue working for PG&E.

2. The Wrongful Discharge Lawsuit

After he was let go, Jameson sued for wrongful termination in breach of contract and the covenant of good faith and fair dealing. PG&E moved for summary judgment on the grounds that Jameson was an at-will employee subject to termination without cause and, alternatively, that PG&E had good cause to terminate him. The trial court granted summary judgment on the ground that he was an at-will employee.

3. PG&E Had Good Cause For The Termination

Jameson asserted his claims on the premise that PG&E’s progressive discipline guidelines, code of conduct, and his tenure with the company, created an implied contract not to terminate his employment without just cause. The court found it unnecessary to address this underlying premise because, even if true, Jameson had not shown facts to show he was terminated without just cause sufficient to preclude summary judgment.

The Challenge To The Investigation Was Found Unpersuasive

Jameson conceded he was fired on the basis of the attorney’s report, but asserted that a jury could reasonably find that the company’s reliance on the report was not reasonable or in good faith. He contended a jury could decide the attorney was biased in favor of her former employer and that her investigation was inadequate because she failed to interview three of the witnesses he asked her to speak with and declined to follow up with him after their initial interview.

The court found these arguments unpersuasive. It determined that the issue was not whether the attorney’s conclusions were correct or whether her investigation could have been better

of an investigation in a wrongful termination case. It observed that the question in such cases is not whether the employee in fact committed the violation (i.e., retaliation) that led to the termination. Rather, it is whether the employer, acting in good faith following an appropriate investigation, had reasonable grounds for believing the employee had done so.

1. The Retaliation Claims

Jameson was promoted to Regional Construction Manager by PG&E in 2012. A PG&E employee, Paul Nelson, who supervised hydrostatic testing of gas transmission pipes, began testing pipes in 2012 on construction sites Jameson managed. In 2013, Nelson reported a safety issue on one of Jameson’s testing sites to a shop steward who reported the concern to Nelson’s supervisors. Later in 2013, Nelson was removed from Jameson’s construction sites and transferred to testing sites outside of the area. As a result, he sometimes had to travel three or four hours to his work assignments. Nelson complained that he was retaliated against for reporting the safety issue.

Sometime later, the Human Resources Director assigned Nelson’s complaint to a Human Resources Manager and retained an employment attorney to conduct an investigation. The attorney, a former PG&E staff lawyer, specialized in workplace investigations and regularly advised clients on employment issues, including discipline, termination and compliance with state, federal and workplace laws. She had investigated approximately 100 violations of PG&E’s code of conduct since 2012.

Based on the attorney’s investigation and her experience with investigations generally, PG&E accepted her finding of retaliation. It also concluded that the misconduct warranted immediate termination. It determined that the misconduct of a high-level manager against a subordinate would have a chilling effect on employees’ freedom to identify and report safety-related concerns if

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reasonably and in good faith after an appropriate investigation determined Jameson retaliated against Nelson. Relying on King, the court stated: “It is the employer’s honest belief in the stated reasons for firing an employee and not the objective truth or falsity of the underlying fact that is at issue. . . .”

4. Conclusion

The court determined that PG&E established on summary judgment that it employed an adequate procedure to investigate Nelson’s allegation of retaliation and reasonably decided to terminate Jameson on the basis of that investigation. Jameson failed to present sufficient evidence to establish a triable issue of fact that PG&E’s decision was biased or procedurally inadequate. Summary judgment was therefore appropriately granted. The court of appeal thus affirmed the decision of the trial court. This case underscores the value of a complete and thorough investigation that is conducted in a fair manner and is designed to assess the facts.

FALSIFICATION OF OVERTIME WORK NEGATED AGE DISCRIMINATION CLAIMS

In McGill v. Comcast Cable Communications Management, 2017 U.S. Dist. LEXIS 179601 (N.D. Cal. Oct. 30, 2017), partial summary judgment was granted in the employer’s favor after it defended claims brought by an employee under California’s Fair Employment and Housing Act (“FEHA”). The employee applied for and was denied promotions multiple times over the course of his employment. When the employee applied for another promotion, his employer allegedly began an investigation into his timesheets and on-call practices. The investigation concluded that the employee regularly claimed overtime hours that were not worked. He was later terminated, and then brought suit against his employer alleging age discrimination and other claims.

or more comprehensive. Rather, the question is whether PG&E’s determination that Jameson retaliated against Nelson for raising a safety issue was “reached honestly, after an appropriate investigation and for reasons that are not arbitrary or pretextual.” It relied on the Supreme Court’s seminal decision in Cotran v. Rollins Hudig Hall International, 17 Cal.4th 93, 107 (1998). Under Cotran, three factual determinations are relevant to the question of employer liability: (1) did the employer act with good faith in making the decision to terminate; (2) did the decision follow an investigation that was appropriate under the circumstances; and (3) did the employer have reasonable grounds for believing the employee had engaged in the misconduct.

The court also relied on King v. United Parcel Service, Inc., 152 Cal.App.4th 426 (2007). There, UPS terminated King after an internal investigation concluded he had falsified a driver’s time card or directed the driver to do so. King sued UPS for breach of an implied contract to terminate only for good cause. In affirming summary judgment for UPS, the court of appeal declined to address the existence of an implied contract superseding King’s at-will employee status because he failed to raise a triable issue that his discharge was in bad faith. The court explained: “Good cause, in the context of implied employment contracts, means ‘fair and honest reasons, regulated by good faith on the part of the employer, that are not trivial, arbitrary or capricious, unrelated to business needs or goals, or pretextual.’ The question critical to UPS’s liability is not whether plaintiff in fact violated the integrity policy by encouraging a subordinate to falsify his timecard, but whether UPS, acting in good faith, following an appropriate investigation, had reasonable grounds for believing plaintiff had done so.”

PG&E Acted In Good Faith

The court found these principles applicable to the case before it. It found that PG&E met its summary judgment burden to show it acted

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1. Burden Of Proving FEHA Discrimination Claim

Under the burden-shifting test that governs FEHA discrimination cases, an employee has the burden of establishing discrimination. This requires the employee to identify an action taken by the employer that, if unexplained, gives rise to an inference of discrimination. If the employee establishes the first prong of this test, the employer must then produce evidence that there was a legitimate, nondiscriminatory reason for the adverse employment action. Then, the employee has an opportunity to attack the legitimate reason as a pretext for the discrimination, or to offer other evidence of discriminatory motive.

2. The Employer Had A Legitimate, Nondiscriminatory Reason

In analyzing these factors, the court found that the evidence supported the employer’s nondiscriminatory reason for the termination. Indeed, it was undisputed that an investigation was conducted into the employee’s timesheet and on-call practices, and the employee testified that he violated the employer’s practices. Moreover, the court determined that there was no evidence of age discrimination or retaliation that would give rise to a triable issue of fact. The court thus granted partial summary judgment on the employee’s FEHA claims, but declined to summarily adjudicate the employee’s rest break violations because of triable factual issues.

WORKERS’ COMPENSATION CASE BARRED SECOND SUIT UNDER FEHA

Workers’ compensation is ordinarily the exclusive remedy when an employee is injured while performing services growing out of and incidental to his or her employment. However, racial or national origin discrimination and harassment is not a “normal incident of employment” and courts will not typically bar Fair Employment and Housing Act (“FEHA”) claims by workers’ compensation

when this species of unlawful conduct has been established.

Other procedural mechanisms exist to bar duplicative claims asserted by employees, however. In Ly v. County of Fresno, 2017 Cal. App. LEXIS 882 (2017), a correctional officers’ FEHA claims for psychiatric injury were not barred by workers’ compensation exclusivity. However, the court of appeal found that claim preclusion barred the second suit because it asserted a violation of the same “primary right.” Thus, the court affirmed the trial court’s summary judgment order in the employer’s favor.

1. Background

Correctional officers of Laotian and Hmong ethnicity filed a complaint with the Department of Fair Employment and Housing, which issued a “right to sue” letter. They filed a civil complaint alleging that they were subject to adverse employment actions that constituted discrimination and harassment. The officers also filed workers’ compensation claims with the Department of Industrial Relations for psychiatric injuries arising from the discrimination. The workers’ compensation judge dismissed the complaints, finding that the employer’s actions were lawful, non-discriminatory, and executed in good faith. The dismissals of the complaints were affirmed by the Workers’ Compensation Appeals Board. After termination of the workers’ compensation cases, the employer filed separate summary judgment motions contending that the civil claims were barred by res judicata and claim preclusion principles.

2. Claim Preclusion Barred The Officers’ Lawsuit

Claim preclusion is based on the “primary right” theory -- that is, a cause of action is comprised of a “primary right” of the defendant and a wrongful act by the defendant constituting a breach of that duty. The court noted that even when there are multiple legal theories alleged, one injury gives rise to only one claim for relief.

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Here, the court found that the officers had one primary right: their right to recover for an injury caused by discrimination, harassment, and retaliation in the workplace. Because the officers chose to pursue their remedies in the workers’ compensation forum on the exact claims asserted in the FEHA action, the court found the workers’ compensation proceedings extinguished the FEHA claims because (1) each officer was afforded the opportunity to present evidence and call witnesses, with Ly represented by counsel, and Herr and Yang allowed to self-direct their testimony, produce documents and call witnesses; (2) the issues litigated were identical; and (3) each workers’ compensation judge found the employer’s actions “were non-discriminatory, in ‘good faith,’ and based upon ‘business necessity.’” Thus, the court of appeal affirmed the trial court’s order.

NINTH CIRCUIT APPROVES BACK PAY “GROSS UPS” IN TITLE VII CASES

Many years may elapse between an alleged adverse employment action and a trial on the merits. This frequently results in significant claims for back pay by a former employee. If an employee is successful at trial, the award of back pay is generally distributed in a lump sum payment in one tax year, which may push the employee into a higher tax bracket and create related tax consequences.

In the recent decision of Clemens v. Qwest Corp., ___ F.3d ___, No. 15-35160 (9th Cir. Nov. 3, 2017), the Ninth Circuit Court of Appeals authorized the use of “gross up” payments -- in the trial court’s discretion -- to account for potential tax consequences affecting a lump sum damages award payment. This decision follows the majority of circuits that have decided this issue under Title VII.

1. Background

In 2013, an employee sued his employer for race discrimination and retaliation in violation

of Title VII. At trial, the jury awarded the employee $157,000 for lost wages and benefits, over $274,000 for emotional distress, and $100,000 in punitive damages. The district court reduced the latter two awards to comply with Title VII’s cap on compensatory and punitive damages. The trial court denied the employee’s request for a “tax consequence adjustment” or “gross up” to compensate him for the increased income tax liability resulting from a lump sum payment. The employee appealed the decision.

2. Gross Up Pay Available For Title VII Awards

The sole question the Ninth Circuit considered was whether the court could award back pay “gross-ups” to awards under Title VII to account for the tax consequences of a lump sum payment. The Ninth Circuit said “yes.” Acknowledging that the circuits are “split” on the issue, the Ninth Circuit sided with the majority of courts in concluding that back pay was an equitable remedy and within the sound discretion of the trial court.

EMPLOYEE’S BONUS COULD NOT BE REDUCED BECAUSE OF MILITARY DUTY OBLIGATIONS

The Uniformed Services Employment and Reemployment Rights Act (“USERRA”) guarantees that an individual who departs for military service shall not be denied any “benefit of employment” due to that service. In Huhmann v. Federal Express Corporation, 2017 U.S. App. LEXIS 21955 (9th Cir. 2017), the Ninth Circuit found that this standard encompassed training that an employee would have reasonably completed -- thereby qualifying him for higher bonus pay -- but for his active duty military service. Thus, the Ninth Circuit affirmed the trial court.

1. Background

An employee worked as a pilot for his employer and also served in the Air Force Reserve.

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In 2003, he was mobilized for active Air Force duty. He was deployed overseas until August 31, 2006. After completing his military service, the employee returned to active pay status with his employer and participated in training to become a first officer on the MD-11 aircraft. The employee was also a member of the bargaining unit represented by the Air Line Pilots Association, and signing bonuses were offered to crewmembers if they approved the proposed collective bargaining agreement. Higher bonuses were paid to crewmembers who had previously completed the training that this employee was just beginning. After the employee received a lower-level bonus of $7,400 -- while others who had completed the training received $17,700 -- he filed suit against his employer, alleging that he would have received the training and higher bonus but for his military duty. Thus, he claimed that he was entitled to the higher bonus amount.

2. The District Court’s Ruling

The lower court focused on whether the employee was “reasonably certain” to reach the higher pay grade if not for his military service. Under the “reasonably certain” test, courts apply both a forward-looking and backward-looking analysis. First, a court examines whether it appears, as a matter of foresight, that individuals similar to the employee at issue would have achieved the position had employment not been interrupted for military service. Then, a court analyzes whether, as a matter of hindsight, he would have completed the necessary prerequisites for the position. Here, the district court found that the employee would have been entitled to the higher bonus and it was reasonably certain that he would have become an MD-11 pilot and entitled to the higher bonus level but for his military service.

3. The Ninth Circuit Affirmed

On appeal, the Ninth Circuit agreed. The Ninth Circuit found that it was reasonably certain that the pilot would have qualified for the higher paying

position but for his active military duty. Indeed, the pilot was set to begin training for the position and quickly passed the training examinations upon return. The employee was therefore found entitled to the higher bonus, attorneys’ fees, and litigation costs.

NURSE WAS FIRED FOR UNION ACTIVITY

In 2010, after its nurses voted to unionize, the Chino Valley Medical Center allegedly refused to bargain and challenged the union election on several unsuccessful grounds. The National Labor Relations Board (“NLRB”) ultimately found that the hospital engaged in serious and widespread unfair labor practices, including firing a worker in retaliation for his role in supporting the union.

The matter was recently adjudicated by the Ninth Circuit in United Nurses Associations of California/Union of Health Care Professionals, et al. v. National Labor Relations Board, 871 F.3d 767 (9th Cir. 2017). There, the Ninth Circuit agreed that “substantial evidence” supported the finding that the hospital committed unfair labor practices in violation of Section 8(a)(1) and (3) of the National Labor Relations Act (“NLRA”) by firing the nurse for his union activity.

1. The Governing Standard

An employer violates Section 8(a)(1) and (3) of the NLRA by, among other things, discharging or disciplining an employee for his or others’ protected activity, such as supporting efforts to unionize. To determine an employer’s motivation for taking an adverse employment action, the Board may infer a discriminatory motive from direct or circumstantial evidence.

2. The Ninth Circuit Affirms The NLRB

Here, the Ninth Circuit found that substantial evidence supported an improper motive for discharging the nurse. The employee was known

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as a “movie star” of the union and was terminated just two weeks after the hospital’s unsuccessful challenge to the election results. Moreover, the nurse’s reason for termination -- which was alleged to be failing to retake a patient’s vitals before copying and releasing medical records -- was not supported by any internal policy or HIPAA breach. The Ninth Circuit also affirmed the Board’s finding that the hospital had served overbroad subpoenas on workers who sought signed union authorization cards.

ARBITRATION AGREEMENT FOUND UNENFORCEABLE DUE TO UNCONSCIONABILITY

Many employers have implemented programs where employees are required to sign arbitration agreements. While such agreements are generally legal, they will not be enforced by a court if they are found to be “unconscionable.” In Baxter v. Genworth North America Corp., Case No. A144744 (Oct. 26, 2017), the court determined that an employer’s mandatory arbitration agreement could not be enforced on unconscionability grounds and, thus, permitted the plaintiff to proceed in court.

1. Background

The plaintiff, who worked in a supervisory capacity, complained to upper management about the format of the performance evaluations she completed for her subordinates. According to the plaintiff, the evaluation forms improperly took into account the employee’s age, race and gender, and thus violated California’s Fair Employment and Housing Act (“FEHA”). She also took a protected leave of absence to care for her ailing mother. During the leave, her position was eliminated due to organizational changes and she was terminated. She sued, asserting retaliation under the FEHA and other employment-related claims.

2. Genworth’s Motion To Compel Arbitration Was Denied By The Trial Court

The plaintiff was required by Genworth to sign an arbitration agreement as a condition of her employment. After her lawsuit was filed, Genworth moved to compel the enforcement of her agreement. Finding that the agreement was both “procedurally” and “substantively” unconscionable, the trial court declined to enforce it. Genworth appealed.

3. The Court Of Appeal Affirmed The Trial Court’s Decision

The court of appeal agreed with the trial court’s decision in its entirety.

a. Procedural Unconscionability

The court explained that procedural unconscionability exists where there is “no real negotiation and an absence of meaningful choice” in the signing of the contract. Here, because the plaintiff was required by Genworth to sign the arbitration agreement as a condition of her employment, the court had little trouble finding that procedural unconscionability existed. As the court noted, the agreement was offered on a “take-it or leave-it basis.”

This aspect of the court’s ruling is not at all surprising. Many (if not most) employment arbitration agreements will be considered “procedurally unconscionable” by a court because employees are required to sign them as a condition of employment. However, as the court explained, an agreement must also be substantively unconscionable before it will be considered unenforceable.

b. Substantive Unconscionability

The court noted that substantive unconscionability exists where the terms of the contract are “overly harsh” or “so one-sided

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as to ‘shock the conscience.’” Here, the court determined that several aspects of Genworth’s arbitration agreement fit this description. For example:

• Under the agreement, the employee (but not Genworth) was prohibited from asking other employees questions about the claim except in the context of a formal deposition. Thus, the plaintiff could not ask her former coworkers for information that might be relevant to her case, whereas Genworth was free to do so. As the court found, this provision “effectively acts as a gag order that limits a complaining employee’s ability to informally investigate a claim.”

• The agreement also set extremely narrow limits on available discovery. Specifically, the plaintiff was only entitled to submit ten interrogatories and five requests for production, and take the depositions of no more than two witnesses for a total of eight hours. While the court noted that the parties to an arbitration agreement may lawfully agree to streamline discovery, Genworth’s limitations were “almost certainly inadequate to permit [the plaintiff] to fairly pursue her claims.” This was especially true given that the plaintiff was also barred from informally speaking with employee witnesses.

• Moreover, the agreement unfairly shortened the statutorily-available time period the plaintiff had to sue. Generally speaking, under the FEHA, an employee has one year to file a charge with the Department of Fair Employment and Housing (“DFEH”) and then another year to file a lawsuit in court. Further, another year can effectively be added if the DFEH decides to investigate the claim. Thus, altogether, a FEHA litigant

often has up to three years to sue under the statute. Genworth’s agreement, however, shortened this period to one year in total, which the court concluded was an unreasonable period of time for an employee to effectively “vindicate her rights.”

• The agreement also placed strict time limitations on the arbitral process. First, the arbitrator had only 120 days to start the arbitration hearing. Second, the hearing was limited to no more than two days. The court acknowledged that an agreement to shorten timelines was not “per se unconscionable.” However, Genworth’s time limits were unreasonably short given the complicated nature of many employment-related cases.

Given existence and overall impact of the above provisions, the court ultimately found “more than ample grounds to support a conclusion that [the agreement] is substantively unconscionable.” As such, it permitted the plaintiff to continue with her lawsuit in court.

4. Conclusion

Arbitration agreements can be advantageous to employers in numerous respects. However, as the Baxter case illustrates, if they are not drafted carefully, a court may decline to enforce them. We therefore recommend that employers work with experienced counsel before implementing any workplace arbitration program.

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A brief review of some of the features of the bill is set out below:

1. Coverage

AB 1008 amends the FEHA, effective January 1, 2018. It applies to California employers with five or more employees, including public agencies, private individuals and corporations. It adds Government Code § 12952 to the FEHA to prohibit employers from including any question on an application that seeks the disclosure of an applicant’s “conviction history” before the employer makes a conditional offer of employment to the applicant. Similarly, it prohibits employers from inquiring into or considering the conviction history of an applicant until after a conditional offer is made. Thus, if an employer obtains the information in another way, e.g., if an applicant volunteers the information during an interview or the crime resulted in media coverage that the employer viewed, the information still may not be considered.

2. Background Checks

The legislation prohibits employers from considering, distributing, or disseminating information about any of the following while conducting a “conviction history” background check:

(a) An arrest not followed by conviction, except in certain circumstances specified in the statute,

(b) Referral to or participation in a pre-trial or post-trial diversion program.

(c) Convictions that have been sealed, dismissed, expunged, or statutorily eradicated pursuant to law.

3. Post-Offer Inquiries

Notably, Section 12952(b) expressly states that the statute will not be construed to prevent

2018 LEGISLATIVE ROUNDUP

GOVERNOR SIGNS STATE-WIDE BAN THEBOX LEGISLATION

On October 14, 2017, California joined many jurisdictions by enacting legislation prohibiting employers from asking job applicants about criminal convictions when Governor Brown signed AB 1008 into law. These laws have been nicknamed “ban the box” measures because many job applications use a “box” that contains questions about convictions that applicants must answer before their application is reviewed. According to AB 1008, 29 states and over 150 cities and counties have adopted “ban the box” laws.

The legislative declarations in favor of AB 1008 list more than a page of justifications for the legislation. They do not address the strong reservations about such rules raised by opponents regarding an employer’s competing obligations to avoid negligent hiring, supervision, and retention, as well as well-established desires to hire those considered best qualified. In fact, while the legislation permits employers to make inquiries about criminal convictions after job offers are extended, it establishes a potentially cumbersome and time-consuming structure for doing so. This plainly discourages employers from using convictions as a basis for disqualification, even then. It should not be overlooked that the rules are added to the Fair Employment and Housing Act (“FEHA”), which creates exposure to significant liabilities, attorneys’ fees and punitive damages for certain violations. Quite simply, the legislation subordinates employers’ prevailing notions regarding hiring decisions to the view that individuals who are convicted of crimes are entitled to a “second chance” that now includes the ability to sue employers who fail to adhere to AB 1008’s protocols.

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an employer from conducting a conviction history background check that is not in conflict with the statute’s general rules. This means, for example, that an employer can conduct a conviction history background check after it has made a conditional offer of employment.

4. Rules Relating To Post-Offer Denials Of Employment

Individualized Assessments

New Section 12952(c) establishes rules that apply if an employer intends to deny a job applicant a position either solely or in part because of the applicant’s conviction history. If this occurs, the employer must make an individualized assessment of whether the applicant’s conviction history has a direct and adverse relationship with the specific duties of the job that justify denying the applicant the position. In making the assessment, the employer must consider all of the following:

(1) The nature and gravity of the offense or conduct.

(2) The time that has passed since the offense or conduct and completion of the sentence.

(3) The nature of the job held or sought.

The employer is permitted to commit the results of the individualized assessment to writing, but is not required to do so.

Written Notification Of Applicants

If the employer makes a preliminary decision that the conviction history disqualifies the applicant from employment, it must notify the applicant of this decision in writing. The notification may, but is not required to, justify or explain the employer’s reasoning for making the preliminary decision. The notification must contain all of the following:

(1) Notice of the disqualifying conviction or convictions that are the basis for the preliminary decision to rescind the offer.

(2) A copy of the conviction history report, if any.

(3) An explanation of the applicant’s right to respond to the notice of the employer’s preliminary decision before that decision becomes final and the deadline by which to respond. The explanation must inform the applicant that the response may include submission of evidence challenging the accuracy of the conviction history report that is the basis for rescinding the offer, evidence of rehabilitation or mitigating circumstances, or both.

5. The Applicant’s Right To Respond

Section 12952(c)(3) states that an applicant shall have at least five business days to respond to the notice provided before the employer may make a final decision. If, within the five business days, the applicant notifies the employer in writing that the applicant disputes the accuracy of the conviction history report that was the basis for the preliminary decision to rescind the offer and that the applicant is taking specific steps to obtain evidence supporting that assertion, the applicant will have five additional business days to respond to the notice. This feature of the legislation is significant and potentially cumbersome because it can delay hiring decisions if an applicant exercises the right to utilize this process and the employer later decides either not to rescind the offer or to select a different candidate. If the applicant submits information pursuant to this rule, the employer must consider it before making a final decision.

6. Written Notification Of Final Decision

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If an employer makes a final decision to deny an application solely or in part because of the applicant’s conviction history, the employer must notify the applicant in writing of the following:

(a) The final denial or disqualification. The employer may, but is not required to, justify or explain its reasoning for making the final denial or disqualification.

(b) Any existing procedure the employer has for the applicant to challenge the decision or request reconsideration.

(c) The right to file a complaint with the Department of Fair Employment and Housing.

7. Exemptions

The legislation states that the rules do not apply in any of the following circumstances:

(a) To a position for which a state or local agency is otherwise required by law to conduct a conviction history background check.

(b) To a position with a criminal justice agency, as defined in Section 13101 of the Penal Code.

(c) To a position as a Farm Labor Contractor, as described in Section 1685 of the Labor Code.

(d) To a position wherein the employer or agent of the employer is required by any state, federal, or local law to conduct criminal background checks for employment purposes or to restrict employment based on criminal history.

8. Definitions Of “Conviction” And “Conviction History”

Sect ion 12952(f) defines the term “conviction” to have the same meaning as defined in paragraphs (1) and (3) of Labor Code Section 432.7(a). The term “conviction history” is defined to include an arrest not resulting in conviction only in the specific, limited circumstances described in Section 432.7(f) when an employer at a health facility, as defined in Health and Safety Code Section 1250, may ask an applicant for certain positions about specified types of arrests. The term “conviction history” also includes an arrest for which an individual is out on bail on his or her own recognizance pending trial.

NEW LAW PROHIBITS SEEKING AND RELYING UPON SALARY HISTORY INFORMATION OF JOB APPLICANTS

Governor Brown signed AB 168 into law on October 12, 2017, in response to concerns that the use of salary history information in the hiring process can perpetuate prior discrimination and suppress wages of women. The legislation adds new Labor Code Section 432.3 to California law, effective January 1, 2018. It prohibits all employers from seeking and relying on salary history information in the recruiting, hiring, and wage setting processes. Notably, the bill adds a new provision to the Labor Code and does not amend the Fair Employment and Housing Act (“FEHA”).

1. General Features Of AB 168

Specifically, it prohibits employers from the following:

(a) Relying on the salary history information of a job applicant as a factor in determining whether to offer employment to the applicant or what salary to offer.

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regarding a current or former employee without the individual’s consent.

NEW PARENT LEAVE ACT SIGNED INTO LAW

The California Family Rights Act (“CFRA”) prohibits covered employers with 50 or more employees from refusing to grant a request by an eligible employee to take up to 12 workweeks of unpaid protected leave during any 12-month period. Such leaves can be requested (1) for reason of a child born to, adopted by, or placed for foster care with the employee, (2) to care for the employee’s parent or spouse who has a serious health condition, or (3) because the employee is suffering from a serious health condition rendering the employee unable to perform the functions of the job. The California pregnancy disability leave law (“PDLL”) also prohibits covered employers with five or more employees from refusing to allow a female employee disabled by pregnancy, childbirth, or related medical condition to take a leave for a reasonable time of up to four months before returning to work. The PDLL also prohibits employers from refusing to maintain and pay for their share of coverage under a group health plan for an employee who takes such a leave.

1. The New Parent Leave Act

On October 11, 2017, Governor Brown signed legislation into law, SB 63, to add these protections. The bill, which is entitled the “New Parent Leave Act (“NPLA”), will take effect on January 1, 2018, and will be codified in Section 12945.6 of the Government Code. It applies to employers with 20 or more employees. It does not provide rights that are coextensive with those afforded by the CFRA to take time off due to the serious health condition of the employee or the employee’s spouse or parent. Instead, the NPLA provides eligible employees the right to take up to 12 weeks of parental leave to bond with a new child within one year of the child’s birth, adoption, or foster care placement. It also contains rules requiring employers to maintain and

(b) Seeking salary history information, including compensation and benefits, about a job applicant, either orally or in writing, personally or through an agent.

It also requires employers to provide the pay scale for a position to a job applicant upon reasonable request.

2. Coverage

The bill will apply to all employers, including state and local government employers and the Legislature. However, it does not apply to salary history information disclosable to the public pursuant to federal or state law. The bill expressly provides that a violation of its provisions would not constitute a misdemeanor.

3. Voluntary Disclosures

The bill states that it does not prohibit an applicant from voluntarily and without prompting disclosing salary history information to a prospective employer. Furthermore, if such a voluntary disclosure occurs, the bill does not prohibit the employer from considering or relying on that voluntarily disclosed salary history information in determining the salary for that applicant.

4. Reliance On Prior Salary

The bill reiterates the provisions in Labor Code Section 1197.5. It notes that nothing in the legislation should be construed to allow prior salary, by itself, to justify any disparity in compensation.

5. The San Francisco Ordinance

It bears noting that San Francisco has adopted an ordinance that is similar. However, the San Francisco ordinance is two-sided. First, it prohibits employers from seeking or using salary history information. Second, it prohibits employers in the city from releasing salary information

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pay for coverage under a group health plan for an employee who takes this leave. The key features of the law are summarized below.

2. Significant Features Of The NPLA

Covered Employers

The NPLA will apply to a covered “employer” as of January 1, 2018. The term “employer” is defined to mean either (a) a person who directly employs 20 or more persons to perform services for a wage or salary, or (b) the state, and any political or civil subdivision of the state and cities. As explained below, however, employees who are subject to the CFRA and the federal Family and Medical Leave Act of 1993 (“FMLA”) because their employers have 50 or more employees are not entitled to additional parental leave rights under the NPLA.

Employee Eligibility Conditions

The protections afforded by the NPLA extend to an employee (1) with more than 12 months of service with the employer, (2) who has at least 1,250 hours of service during the previous 12-month period, and (3) who works at a worksite in which the employer employs at least 20 employees within 75 miles. Thus, employees who work for employers who either employ fewer than 20 total employees or fewer than 20 employees within 75 miles of the worksite are not eligible. Likewise, employees who do not meet the minimum 12-months-of-service or 1,250-hours-of-service requirements do not qualify.

Qualifying Events

The NPLA makes it unlawful for a covered employer to refuse to allow an eligible employee to take up to 12 weeks of parental leave to bond with a new child within one year of the child’s birth, adoption, or foster care placement. Significantly, on or before the leave begins, the employer must provide a guarantee of employment in the same or a comparable position when the leave ends. If

the employer fails to do so, it will be deemed to have refused to allow the leave.

Paid Time Off

Eligible employees are entitled to utilize accrued vacation pay, paid sick time, other accrued paid time off, or other paid or unpaid time off negotiated with the employer during the period of the parental leave.

Maintenance Of Insurance Coverage

Employers are required to maintain and pay for coverage for an eligible employee who takes parental leave under a group health plan for the duration of the leave, not to exceed 12 weeks over the course of a 12-month period. Employers must provide such coverage at the level and under the conditions that coverage would have been provided if the employee had continued to work for the duration of the leave.

An employer may recover the premium paid under the NPLA to maintain coverage for the employee if two conditions occur: (1) the employee fails to return from the leave after the period of leave has expired, and (2) the failure to return from the leave is for a reason other than the continuation, recurrence, or onset of a serious health condition or other circumstances beyond the employee’s control.

Relationship To Pregnancy Disability Leave

Government Code Section 12945.6(b) states that employees are entitled to take leave provided pursuant to the PDLL in Government Code Section 12945, in addition to the leave provided pursuant to the new law. Therefore, employees can take pregnancy disability leave for up to four months under the PDLL without using the 12 weeks of parental leave available under the NPLA.

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5. Regulations

The NPLA directs the California Fair Employment and Housing Council (“FEHC) to incorporate the regulations interpreting the CFRA by reference to parental leave under the new law.

6. Sunset Provision

The new law is scheduled to remain in effect until January 1, 2020. On that date, it will be replaced by other rules.

7. The Senate Rules Committee’s Chart

The Legislature posted the chart below in its description of the bill:

CFRA/FMLA (Job

Protected)

PFL (No Job

Protection)

PDL (Job

Protected)

SB 63 (Job

Protected)

Employers Covered

50 or more employees in 75 mile radius of worksite

One or more (employ-ee pays, employee

gets)

Five or more employees

20 or more employees within 75

miles

Employee Eligibility

Worked 1,250 hours in prior 12

months

Once em-ployee earns $300 in base

period for fund contri-

bution

Immediate as

necessary

Worked 1,250 in prior

12 months

Reason for Leave

Employee serious health

condition; seriously ill family mem-

ber care; bond with

newborn or newly placed adopted or foster child

Care for seriously ill family mem-

ber; bond with a child

within 1 year of birth,

foster care or adoption placement

Disability due to

pregnancy, childbirth or related medical

condition

Bond with a child w/in 1

year of birth, adoption or foster care placement

Length of Leave

12 weeks in 12-month

period

6 weeks in 12-month

period

Up to 4 months

Up to 12 weeks

Paid or Unpaid

Unpaid, may run

concurrent with other paid leave

Partial wage replacement

Unpaid, may run

concurrent with SDI for partial wage replacement

Unpaid, employee

can use va-cation, paid

sick time

Continued Health Coverage

Yes No Yes Yes

Relationship With The CFRA And FMLA

The NPLA does not apply to an employee who is subject to both the CFRA in Government Code Section 12945.2 and the FMLA, which apply to employers with 50 or more employees. The NPLA thus does not provide additional parental leave rights to employees who already enjoy similar rights under the CFRA and the FMLA.

Employment Of Both Spouses

A special rule applies if both parents entitled to a leave under the law are employed by the same employer. In that case, the employer need not grant leave in connection with the birth, adoption, or foster care of a child that would allow the parents parental leave totaling more than 12 weeks within the year. An employer may, but is not required to, grant simultaneous leave to both spouses.

3. Certificated School Employees

Government Code Section 12945.6(f) states that parental leave taken under the NPLA shall run concurrently with parental leave taken by certificated school employees based on Sections 44977.5, 45196.1, 87780.1, and 88196.1 of the Education Code.

4. Anti-Retaliation Provisions

The law makes it unlawful for an employer to refuse to hire, or to discharge, fine, suspend, expel, or discriminate against, an individual because he or she (a) exercises the right to parental leave under the law or (b) gives information or testimony in an inquiry or proceeding related to rights guaranteed under the law. The legislation also prohibits employers from interfering with, restraining, or denying the exercise of, or the attempt to exercise, any right provided under the law.

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LEGISLATION CREATES NEW LEAVE RIGHTS FOR MEMBERS OF STATE MILITARY RESERVE

AB 1711 was signed into law by Governor Brown on July 21, 2017. It adds Section 19771.1 to the Government Code, effective January 1, 2018. California law already provides employees the right to take leaves for military service, and affords reinstatement rights and benefit protections during that service for executive branch employees who are members of the Armed Forces, the National Guard, or the Naval Militia. AB 1711 provides members of the State Military Reserve (“SMR”) the right to military leave and other specified benefits on the same basis as a member of the National Guard or other military reserve personnel.

The SMR is an all-volunteer strategic force that provides an adequately trained and organized state military reserve force under the exclusive control of the Governor. Members of the SMR generally receive no compensation for their work in the event of a state emergency. Members of the SMR can be ordered to Emergency State Active Duty by the Governor. The legislative analysis of the bill noted that excluding SMR members from receiving the same state employee military leave benefits as members of the California National Guard and the Naval Militia appears to have been a legislative oversight. The legislation corrects this.

HARASSMENT TRAINING MUST COVER GENDER IDENTITY, GENDER EXPRESSION, AND SEXUAL ORIENTATION

The California Fair Employment and Housing Act (“FEHA”) prohibits unlawful harassment of job applicants and employees. It also requires employers with 50 or more employees to provide at least two hours of prescribed training and education regarding sexual harassment to all supervisory employees within six months of their assumption of a supervisory position and once every two years. On October 15, 2017, Governor Brown signed SB 396 into law to expand the training obligations

of employers with 50 or more employees. Effective January 1, 2018, such employers must include, as a component of the training and education for supervisors, training regarding harassment based on gender identity, gender expression, and sexual orientation.

In addition to the training obligation, the FEHA requires employers to display a poster on discrimination in employment in a prominent and accessible location in the workplace. The poster created by the California Department of Fair Employment and Housing (“DFEH”) includes information relating to the illegality of sexual harassment. SB 396 will also require each employer to post a DFEH poster regarding transgender rights.

NEW BILL REQUIRES SEXUAL HARASSMENT TRAINING BY FARM LABOR CONTRACTORS

California law prohibits the Labor Commissioner from issuing a farm labor contractor license unless the applicant attests in writing that its employees have received sexual harassment prevention and reporting training that meets certain requirements relating to the substance, administration, and records of the training. On October 2, 2017, Governor Brown signed SB 295 into law to amend Labor Code Section 1684, effective January 1, 2018.

The bill requires that the training for each agricultural employee be in the language understood by that employee. It also requires a farm labor contractor issued a license to provide the Labor Commissioner with a complete list of all materials or resources utilized to provide sexual harassment prevention training and to provide the total number of agricultural employees trained in sexual harassment prevention.

The bill prohibits employers from failing to comply with existing rules relating to the training requirements or the bill’s requirements to provide

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the training in the language understood by the employee. It authorizes the Labor Commissioner to issue citations and assess civil penalties of $100 for each violation. The new rules are embodied in Labor Code Section 1684(a)(8) and in new Section 1697.5, which states that it is a violation for a licensee (1) to fail to train an agricultural employee at the time of hire, (2) to fail to provide training in a language understood by the agricultural employee, (3) to fail to provide an agricultural employee with at least the minimum training specified in the law, or (4) to fail to provide an agricultural employee either with a record of his or her training or a copy of the specified Department of Fair Employment and Housing (“DFEH”) sexual harassment pamphlet.

At a minimum, the sexual harassment prevention training must include components of the following as consistent with the training rules in Section 12950 of the Government Code of the Fair Employment and Housing Act (“FEHA”): (1) the illegality of sexual harassment; (2) the definition of sexual harassment under applicable state and federal law; (3) a description of sexual harassment, utilizing examples; (4) the internal complaint process of the employer available to the employee; (5) the legal remedies and complaint process available through the DFEH; (6) directions for how to contact the DFEH; and (7) the protection against retaliation provided under current law. The trainer may use the text of the DFEH pamphlet, DFEH-185, “Sexual Harassment” as a guide to training, or may use other written material or other training resources covering the information required.

LAW PROHIBITING DISCRIMINATION AGAINST MEMBERS OF THE MILITARY OR NAVAL FORCES EXPANDED

Governor Brown signed AB 1710 into law on October 8, 2017. It amends Section 394 of the Military and Veterans Code, effective January 1, 2018. The statute prohibits various types of discrimination, including employment

discrimination, against an officer, warrant officer, or enlisted member of the military or naval forces of the state or of the United States because of his or her membership or service. As amended, Section 394 includes discrimination in terms, conditions, or privileges of employment, position or status or disqualification from employment by virtue of membership or service in the military forces of the state or of the United States.

Section 394(d) prohibits employers from discharging a person from employment, hindering or preventing the person from performing any military service or from attending any military encampment or place of drill or instruction he or she may be called upon to perform or attend, or prejudicing or harming him or her in any manner in his or her terms, conditions, or privileges of employment by reason of performance of military service or duty or attendance at military encampments or places of drill or instruction. It also prohibits employers from dissuading, preventing, or stopping any person from enlisting or accepting a warrant or commission in the California National Guard or Naval Militia by threat or injury to him or her in respect to his or her terms, conditions, or privileges of employment.

FEHA AMENDED TO DELETE GENDER-SPECIFIC PRONOUNS

On October 14, 2017, Governor Brown signed AB 1556 into law, apparently for reasons that reflect a high level of political sensitivity. In legislation that spans 30 pages and amends numerous provisions of the California Fair Employment and Housing Act (“FEHA”), the California Family Rights Act (“CFRA”) and other statutes, the bill revises the statutory provisions by deleting gender-specific personal pronouns and attempting to make the provisions gender-neutral. This includes the statutory provisions relating to pregnancy discrimination. For instance, the bill deletes references to “female person” and “female employee.” The revised language refers instead to “person” and “employee” and makes other conforming changes.

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LABOR COMMISSIONER’S AUTHORITY OVER RETALIATION CLAIMS EXPANDED UNDER NEW BILL

Governor Brown signed SB 306 into law on October 3, 2017, to expand the role of the Labor Commissioner in investigating and resolving complaints of retaliation under the Labor Code. The new rules are set forth in amended Labor Code Section 98.7 and new Sections 98.74, 1102.61, and 1102.62.

Effective January 1, 2018, the bill will authorize the Division of Labor Standards Enforcement (“DLSE”) to begin an investigation of an employer, with or without a complaint being filed, when specified retaliation or discrimination is suspected during the course of a wage claim or other specified investigation being conducted. If the Labor Commissioner finds reasonable cause to believe that any person has engaged in or is engaging in a violation, he may petition a superior court for injunctive relief. If an employee has been discharged or faced adverse action for raising a claim of retaliation for asserting rights under any law under the jurisdiction of the Labor Commissioner, the bill requires a court to order appropriate injunctive relief on a showing that reasonable cause exists to believe a violation has occurred. Notably, the bill provides that temporary injunctive relief under these provisions would not prohibit an employer from disciplining or terminating an employee for conduct that is unrelated to the claim of the retaliation.

BILL MAKES BUILDING CONTRACTORS JOINTLY LIABLE FOR WAGE AND BENEFIT OBLIGATIONS OF SUBCONTRACTORS

AB 1701 provides that “direct contractors” will be jointly liable with “subcontractors” for unpaid wage, fringe benefits, or other benefit payment obligations of the subcontractor for contracts entered into on or after January 1, 2018. Specifically, the bill requires a direct contractor making or taking a contract in the state for the erection, construction, alteration, or repair of a

building, structure, or other work, to assume, and be liable for, debts owed to a wage claimant that are incurred by a subcontractor acting under, by, or for the direct contractor for the wage claimant’s performance of labor included in the subject of the original contract. The obligation is set forth in new Section 218.7 of the Labor Code.

The bill also prohibits direct contractors from evading the requirements of the new law. However, it does not prohibit direct contractors or subcontractors from contracting for or enforcing any otherwise lawful remedies against subcontractors hired for liability created by the nonpayment of wages, fringe or other benefit payments, or contributions by the subcontractors.

The bill authorizes the Labor Commissioner to enforce against a direct contractor the liability for unpaid wages created by the legislation pursuant to Section 98 or 1197.1 of the Labor Code. In such an action, the direct contractor’s liability is limited to unpaid wages, including any interest owed. In addition, a third party owed fringe or other benefit payments or contributions on a wage claimant’s behalf may bring a civil action against a direct contractor to enforce the liability created by the bill. In addition, the bill authorizes direct contractors to request subcontractors to provide payroll records relating to the obligations the bill creates. Upon request of a direct contractor, the subcontractor must provide award information that includes the project name, the name and address of the subcontractor, and other information specified by the legislation.

DIR INCREASES EXEMPTION RATES FOR COMPUTER EMPLOYEES AND PHYSICIANS

California Labor Code Sections 515.5 and 515.6 provide overtime pay exemptions for computer software employees who satisfy tests relating to the amount of their pay and duties. They also provide an overtime pay exemption for some physicians and surgeons. In order to qualify for either exemption, an employee’s hourly rate of pay must not be less than statutorily specified rates.

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The California Department of Industrial Relations (“DIR”) is responsible for adjusting the rates October 1st of each year to be effective on January 1st of the following year. The adjustments are based on an amount equal to the percentage increase in the California Consumer Price Index for Urban Wage Earners and Clerical Workers.

1. Computer Software Employees

On October 3, 2017, the DIR issued a memorandum announcing increases in the rates that will take effect on January 1, 2018. The DIR adjusted the computer software employee’s minimum hourly rate of pay for the exemption from $42.35 to $43.58. It also increased the minimum monthly salary from $7,352.62 to $7,565.85, as well as the minimum annual salary from $88,231.36 to $90,790.07. This reflects the 2.9% increase in the California Consumer Price Index for Urban Wage Earners and Clerical Workers.

2. Licensed Physicians

On the same date, the DIR announced an increase in the amounts necessary to utilize the overtime exemption for licensed physicians and surgeons. Under Labor Code Section 515.6, licensed physicians and surgeons are exempt from the overtime requirements in Labor Code Section 510 if certain criteria are met. One of the criteria is that the employee’s hourly rate of pay is not less than a specified amount. The DIR announced that this hourly rate will increase from $77.15 to $79.39, effective January 1, 2018.

LEGISLATION REQUIRES EMPLOYERS TO IMPLEMENT CALIFORNIA’S “SANCTUARY STATE” POLICIES

The California Legislature has demonstrated open hostilities towards the federal government’s immigration policies and enforcement of the Immigration Reform and Control Act (“IRCA”). In one of several acts of outward defiance, the Legislature passed AB 450, which Governor Brown

signed into law on October 5, 2017. The legislation forces California employers to facilitate the state’s “sanctuary state” commitment by establishing rules that effectively compel employers to impede federal enforcement efforts under the IRCA. This will unquestionably thrust employers into the turbulence created by the tension between the state and federal laws.

1. Background

California law prohibits employers from engaging in unfair immigration-related practices against a person for exercising specified rights. It also grants the Labor Commissioner access to places of labor and authorizes the Labor Commissioner to conduct investigations and prosecute actions.

Specific Types Of Cooperation Will Be Prohibited By State Law

AB 450 reaches far beyond existing law by imposing specific obligations on public and private employers that are plainly designed to impede the federal immigration agencies seeking to carry out enforcement activities under federal law. For example, the bill prohibits employers from providing voluntary consent to an immigration enforcement agent to enter nonpublic areas of a place of labor, unless the agent provides a judicial warrant or it is otherwise required by federal law. Similarly, except as required by federal law, the bill prohibits employers from providing voluntary consent to an immigration enforcement agent to access, review, or obtain their employee records without a subpoena or court order. The legislation grants the Labor Commissioner or the Attorney General the exclusive authority to enforce its provisions and would require that any penalty recovered be deposited in the Labor Enforcement and Compliance Fund. The potential penalties are substantial and can range from $2,000 up to $5,000 for a first violation and $5,000 up to $10,000 for each subsequent violation.

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Disclosure Obligations

The legislation does not simply prevent employers from cooperating with federal immigration enforcement agents by granting consent to enter nonpublic areas of a place of labor or consent to access, review, or obtain employee records. It expressly mandates that employers provide a current employee notice containing specific information, by posting in the language the employee normally uses to communicate employment information, of an inspection of I-9 Employment Eligibility Verification forms or other employment records conducted by an immigration agency within 72 hours of receiving the federal notice of inspection. In addition, it requires employers to provide an affected employee a copy of the notice of inspection of I-9 forms upon reasonable request.

The bill requires the Labor Commissioner to create a template for these purposes and make it available by July 1, 2018. It further requires employers to provide to an affected current employee, and to the employee’s authorized representative, if any, a copy of the written immigration agency notice that provides for the inspection results and written notice of the obligations of the employer and the affected employee arising from the action.

2. The Specific Statutory Rules

The bill adds Section 7285.1, 7285.2 and 7285.3 to the Government Code in addition to Sections 90.2 and 1019.2 to the Labor Code. A summary of the statutory rules is as follows:

a. Government Code Section 7285.1 prohibits employers and persons acting on behalf of employers from providing voluntary consent to an immigration enforcement agent to enter any nonpublic areas of a place of labor. Exceptions apply where federal law requires otherwise or an immigration enforcement agent provides a judicial warrant.

b. Section 7285.2 of the Government Code prohibits employers and persons acting on behalf of employers from providing voluntary consent to an immigration enforcement agent to access, review, or obtain the employer’s employee records without a subpoena or judicial warrant. An exception exists where federal law requires otherwise. In addition, the section does not prohibit an employer from challenging the validity of a subpoena or judicial warrant in a federal district court.

c. Section 7285.3 of the Government Code states that the legislation shall not be construed or applied to restrict or limit an employer’s compliance with a memorandum of understanding governing the use of the federal E-Verify system.

d. Labor Code Section 90.2 requires employers to provide a notice to each current employee, by posting in the language the employer normally uses to communicate employment-related information to the employee, of any inspection of I-9 Employment Eligibility Verification forms or other employment records conducted by an immigration agency within 72 hours of receiving notice of the inspection. Written notice shall also be given within 72 hours to the employee’s authorized representative, if any. The posted notice must contain information specified by the legislation.

e. Labor Code Section 1019.2 is similarly designed to limit an employer’s ability to address its obligations under federal law. It prohibits employers and persons acting on behalf of employers from reverifying the employment eligibility of a current employee at a time or in a manner not required by the IRCA, Section 1324a(b) of Title 8 of the United States Code. Employers who violate this prohibition are subject to a civil penalty of up to $10,000 that is recoverable by the Labor Commissioner.

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IMMIGRATION STATUS DECLARED IRRELEVANT TO LIABILITY ISSUES UNDER CALIFORNIA LAW

The California Legislature passed a number of bills dealing with immigration-related issues. On July 31, 2017, Governor Brown signed one of these measures, AB 1690, into law to deal with personal rights and compensatory relief under several California laws. The core feature of the bill is to declare that all protections, rights, and remedies available under state law are available to individuals regardless of their immigration status if they apply for or obtain employment, subject to the requirements of federal law. The thrust of the amendment is to include an explicit statement finding and declaring that for purposes of enforcing state labor, employment, civil rights, consumer protection, and housing laws, a person’s immigration status is irrelevant to the issue of liability. Further, no inquiry is permitted into a person’s immigration status, unless it is necessary in order to comply with federal immigration law.

1. The Statutory Language

The bill amends Section 3339 of the Civil Code, Section 7285 of the Government Code, Section 24000 of the Health and Safety Code, and Section 1171.5 of the Labor Code, and includes the following language within the amended statutes:

“(a) All protections, rights, and remedies available under state law, except any reinstatement remedy prohibited by federal law, are available to all individuals regardless of immigration status who have applied for employment, or who are or who have been employed in this state.”

2. Discovery Issues And Inquiries

The bill addresses discovery and inquiries regarding a person’s immigration status. It states that, because a person’s immigration status is irrelevant to the issue of liability for purposes of enforcing state labor, employment, and civil rights

laws, in proceedings undertaken to enforce those state laws no inquiry shall be permitted into a person’s immigration status. An exception applies where the person seeking to make this inquiry has shown by clear and convincing evidence that it is necessary in order to comply with federal immigration law.

MISCELLANEOUS DEVELOPMENTS

NEW STANDARD OF DEFERENCE TO UNFAIR LABOR PRACTICE CLAIM ONLY APPLIES PROSPECTIVELY

In Beneli v. National Labor Relations Board, 873 F.3d 1094 (9th Cir. 2017), the Ninth Circuit held that the National Labor Relations Board’s new standard of deference to arbitral decisions only applies prospectively. Nevertheless, the court upheld the denial of the petitioner’s previous unfair labor practice complaint as it was analyzed under the prior (more deferential) standard.

1. Prior Standard For Deferral To Arbitral Decisions

Previously, when a dispute went to an Administrative Law Judge (“ALJ”) from a mediation or arbitration proceeding under a collective bargaining agreement, deferral to the arbitral decision would be appropriate when the following elements were satisfied: (1) all parties agreed to be bound by the decision; (2) the proceedings appeared to be fair and regular; (3) the arbitrator adequately considered the unfair labor practice issues, which requires the unfair labor practice issue and the contractual issue to be “factually parallel” and the arbitrator to have been “presented generally” with relevant facts; and (4) the arbitration award was not clearly repugnant to the NLRA. In this recent Ninth Circuit decision, however, the court acknowledged a new standard of deference was appropriate on a going forward basis.

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2. New Standard For Deferral To Arbitral Decision

Under the new standard, the Board will now defer to an arbitral decision if the party urging deferral shows: (1) the arbitrator was explicitly authorized to decide the unfair labor practice issue; (2) the arbitrator was presented with and considered the statutory issue, or was prevented from doing so by the party opposing deferral; and (3) Board law reasonably permits the award.

This new standard shifts the burden of proof from “not clearly repugnant” to “reasonably permit[ted]” and makes deferral to the arbitral decision less likely. However, the Ninth Circuit nevertheless refused to apply the new standard here and affirmed the Board’s decision. It found that to do otherwise would necessitate a new analysis by the subcommittee and the ALJ, thereby undermining the binding arbitration to which all parties had consented.

CITY’S LICENSING CONTRACTS MAY PROHIBIT WORK DISRUPTIONS AT AIRPORT

In Airline Service Providers Ass’n v. Los Angeles World Airports, 873 F.3d 1074 (9th Cir. 2017), the Ninth Circuit Court of Appeals recently held that the City of Los Angeles, as the operator of the Los Angeles International Airport, may enter into contracts with third party businesses that prohibit “picketing, boycotting, stopping work, or any other economic interference.” The court found that because the City was acting as a “market participant” and not as a regulator, the preemption provisions of the National Labor Relations Act (“NLRA”) and other federal statutes did not apply.

1. Background

Airlines operating out of LAX contract with companies to refuel and load planes, take baggage and tickets, and provide other services. The City of Los Angeles licenses those services through a contract that prevents certain work disruptions,

including a “labor peace agreement.” The peace agreement includes provisions prohibiting “picketing, boycotting, stopping work, or any other economic interference.”

Two trade associations that operate from LAX brought a lawsuit in federal court alleging that these provisions constituted “municipal regulations” imposed by the City, and were preempted (or superseded) by federal labor law. The district court dismissed the complaint without leave to amend, and the trade associations appealed.

2. The City Was Acting As A Market Participant

The critical issue in the case was whether the City was acting as a “market participant” or a regulator in executing contracts with third party businesses. To decide the issue, the court applied a two-prong test. The court first asked if the challenged governmental action was undertaken in pursuit of the “efficient procurement of needed goods and services” as is typically effectuated by a private business in the same situation. Second, does the narrow scope of the challenged action defeat an inference that its primary goal was to encourage a general policy rather than to address a specific proprietary problem? If the answer to either question is “yes,” the court would find that the governmental entity was acting as a market participant.

Here, the Ninth Circuit found that the City satisfied both prongs. The court found that it was taking action to protect the proprietary interest of running the airport smoothly and was participating in the air transportation market. It also found that the contract provisions were “narrowly tied to a specific proprietary problem: service disruptions at LAX, which the City manages as proprietor.” Thus, because the City was a market participant when it added the provision to the licensing contract, the NLRA, Railway Labor Act, and Airline Deregulation Act did not apply to its actions.

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subjects covered are: (1) the nature and origin of the employment at-will rule, (2) protections afforded union employees, (3) state and federal laws regulating disciplinary action, (4) contractual limitations on disciplinary actions, (5) judicially-recognized limitations on disciplinary actions, (6) the three branches of the wrongful discharge doctrine in California, (7) emotional distress claims, (8) defamation claims, (9) conspiracy claims, (10) invasion of privacy claims, (11) negligent hiring, retention and supervision standards, (12) retaliation, (13) constructive discharge, (14) noncompetition rules, (15) standards used to evaluate and administer disciplinary action, (16) good documentation practices, (17) investigations, (18) practical guidelines for avoiding unfair dismissal claims, (19) supervisor training, (20) the use of termination letters, (21) post-termination actions and procedures, (22) the use of severance agreements and releases, (23) the role of unemployment insurance proceedings, (24) performance evaluation and appraisal systems, (25) the use of interim evaluations, (26) mass layoffs and business closings, (27) the role of personnel policies and employee handbooks, (28) grievance procedures, (29) employee polygraph rules, (30) remedies and defenses, (31) the after-acquired evidence doctrine, and numerous other subjects.

This book will be available in January from Castle Publications, Ltd for only $149.00, plus tax and shipping ($172.16 total) for the print format and $199.00, plus tax per copy ($217.91 total) for the electronic format. Orders can be placed directly with Castle Publications, Ltd. at (213) 455-7617 or online at www.castlepublications.com.

NEW EDITION OF BOOK OF HUMAN RESOURCES FORMS OUT SOON

Castle Publications, Ltd. is pleased to announce that Attorney Richard J. Simmons is completing the new 2018 edition of the Book of Human Resources Forms (Fifth Edition) in both print and electronic formats. The publication was

NEW PUBLICATIONS

NEW WRONGFUL DISCHARGE MANUAL WILL BE AVAILABLE IN JANUARY

We are pleased to announce that Richard Simmons is completing a new edition of his well-known publication, the Wrongful Discharge, Staff Reduction And Employment Practices Manual (Fifth Edition). The new edition of the book, which exceeds 750 pages, provides a comprehensive review of the state and federal laws governing disciplinary action, terminations, layoffs, and staff reductions.

1. Sample Forms

The new edition of the book contains more than 50 pages of sample employment forms for review, including an offer of employment letter, integrated at-will statements, performance evaluations, disciplinary action forms, exit interview forms and checklists, employee reference policies, layoff notices, grievance submission forms, and a request to inspect personnel files.

2. Arbitration And ADR Covered

The book examines alternative dispute resolution (“ADR”) mechanisms, including mediation and arbitration. The chapter on this subject includes a review of recent cases, including California Supreme Court and U.S. Supreme Court decisions regarding the enforceability of employment arbitration agreements.

3. The Book Addresses A Full Range Of Topics

Other chapters of the book address significant issues that make it an essential desk reference for HR officials, supervisors, attorneys and others responsible for disciplinary matters, layoffs, and important personnel decisions. Among the

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written on the premise that every employer and human resources representative must administer a wide variety of personnel practices at every stage of the employment relationship.

In order to act consistently and legally, standardized procedures and practices are essential. As a result, a critical need existed for personnel forms that guide each HR, personnel, payroll and employee relations representative through the maze of governing rules and regulations. The need for standardized forms begins with the hiring, recruitment and application process and continues through the time an employee terminates.

1. Over 240 Forms

The new publication is more than 430 pages long. It presents over 240 personnel and HR forms that will greatly simplify many personnel administration tasks. These include a vast collection of forms that guide those responsible for personnel administration through the entire employment relationship, from its inception to its conclusion, and beyond.

The sample forms and letters include job applications, offer letters, counseling forms, performance improvement plans, meal period forms, cell phone reimbursement forms, expense reimbursement forms, time card certifications, disciplinary actions plans, layoff notices, leave of absence forms, change of status forms, and many more. This publication is an essential resource for every employer. Any one of the forms will pay for the entire cost of the publication.

2. Chapters Cover Entire Employment Relationship

The chapters of the book include forms in the following general areas: (a) pre-hire forms, (b) new-hire and orientation forms, (c) payroll practice forms, (d) employee benefit forms, (e) personnel action and status forms, (f) leave of absence and time-off forms, (g) disciplinary action

and grievance forms, (h) education assistance and training forms, (i) separation and post separation forms, and (j) government forms.

3. Electronic Publication Also Available

The electronic version of this book includes all the features of our other electronic publications plus a zip file containing all of the non-government forms in Word format. This allows for easy-customization of the forms to add a company logo, employee data, or other company information.

This book will be available in January from Castle Publications, Ltd for only $149.00, plus tax and shipping ($172.16 total) for the print format and $179.00, plus tax per copy ($196.01 total) for the electronic format. Orders can be placed directly with Castle Publications, Ltd. at (213) 455-7617 or online at www.castlepublications.com.

2018 EDITION OF WAGE AND HOUR MANUAL WILL BE AVAILABLE IN ELECTRONIC AND PRINT FORMATS

The 2018 edition of the Wage and Hour Manual for California Employers, Twenty-First Edition, will soon be available. The Manual is authored by Attorney Richard J. Simmons, a partner with the law firm of Sheppard, Mullin, Richter & Hampton LLP. The new edition is more than 990 pages, and provides a detailed analysis of the California and federal wage and hour laws.

Simmons’ Wage and Hour Manual for California Employers is generally regarded as the best resource available on the California and federal wage and hour requirements. The new edition examines new case law developments, including the Supreme Court’s Augustus v. ABM and Brinker Restaurant decisions, new statutory rules, the amendments to state law adopted by the California Industrial Welfare Commission (“IWC”), the AB 60 changes, and amendments to the Fair Labor Standards Act (“FLSA”), including

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the overtime exemption regulations. It also addresses numerous other judicial developments. This includes a review of new cases involving the white collar exemptions, the “salary basis” rules, commissions, standards on “unconscionability of contracts,” and deductions from wages, as well as many other topics.

The book also discusses the state and federal wage and hour laws that govern employers, meal and rest period requirements, the federal laws regulating government contractors, independent contractor and joint employment relationships, the legal standards regulating the maximum number of hours employees can work, the employment of minors, minimum wage obligations, tipped employee rules, hours worked, overtime standards, flexible work arrangements, exemptions, the payment of wages, record-keeping rules, tort liability issues, posting obligations, uniforms, medical examinations, enforcement standards, and a variety of additional topics.

This book will be available by February from Castle Publications, Ltd for only $149.00, plus tax and shipping ($172.16 total) for the print format and $199.00, plus tax per copy ($217.91 total) for the electronic format. Pre-orders can be placed directly with Castle Publications, Ltd. at (213) 455-7617 or online at www.castlepublications.com.

16TH EDITION OF SEXUAL HARASSMENT TRAINING MANUAL AVAILABLE SOON

The California Fair Employment and Housing Council (FEHC) issued new regulations requiring significant revisions to policies prohibiting harassment, discrimination and retaliation. Among other changes, they address investigations, confidentiality, complaints, anti-retaliation standards, translation requirements, and the need to update policies to cover all characteristics protected by California law. This includes the new protections regarding gender identity, gender expression and genetic information. The FEHC

also modified its regulations regarding the two-hour training and tracking rules and the negative effects of “abusive conduct.”

These developments under state law do not present employers’ only concerns. The U.S. Supreme Court recently decided a landmark case that addresses workplace harassment and redefines the term “supervisor” under Title VII.

These and other developments are reflected in the new edition of the Sexual Harassment Training Manual and Prevention Kit (16th Edition), authored by Attorney Richard J. Simmons of the law firm of Sheppard, Mullin, Richter & Hampton LLP. It is designed to assist employers to train employees regarding the critical issues associated with unlawful harassment discrimination and retaliation. This includes training top management employees, managers, supervisors, and rank-and-file employees.

The publication has been updated to address California’s new regulations, the requirements of AB 1825 (the California law imposing supervisor training obligations), the impact of the U.S. Supreme Court and California Supreme Court decisions, and the statutory changes to the Fair Employment and Housing Act.

1. The Publication’s Valuable Content

The publication is written for HR officials, executives, managers, employers, attorneys, and supervisors. In order to achieve its objective of providing tools to train all employees, the publication includes updated training outlines, a “new hire and orientation checklist,” sample quizzes for managers and hourly employees, sample Information Sheets regarding unlawful harassment, sample policies against unlawful harassment, sample promise of compliance with policies against unlawful harassment, and training scenarios that can be used as educational tools.

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2. Use As A Training Tool

The publication provides a review of the laws regarding sexual harassment in a form that can be presented to all managers, supervisors and employees. It also discusses the objectives of training and how to structure training programs, whether they are conducted by internal HR officials or outside experts. It examines what constitutes sexual harassment vs. legally permissible behavior, discusses the types of conduct that can cause harassment claims, and reviews the responsibilities that employers have for their supervisors. It also reviews the personal liability standards that exist.

3. Investigation Tips And Practical Pointers

The publication addresses the method of developing and implementing policies prohibiting unlawful harassment, provides insights regarding the judicial perspective on the subject, including the U.S. and California Supreme Court decisions, identifies the manner of receiving and investigating complaints of harassment internally, and offers additional practical ideas. It includes information regarding the manner in which discipline should be imposed where violations of anti-harassment policies occur. It also includes the new Workplace Harassment Guide issued by the DFEH offering guidelines on how to handle sexual harassment investigations.

4. Availability

The 2018 training manual and prevention kit will be available from Castle Publications, Ltd. In January for only $89.00, plus tax and shipping ($104.46 total) for the print format and $119.00, plus tax per copy ($130.31 total) for the electronic format. Pre-orders can be placed directly with Castle Publications, Ltd. at (213) 455-7617 or online at www.castlepublications.com.

LEAVES OF ABSENCE AND TIME OFF FROM WORK MANUAL UPDATED FOR 2018

In his new edition of the Leaves of Absence and Time Off From Work Manual (Eighteenth Edition), Attorney Richard J. Simmons of Sheppard, Mullin, Richter & Hampton LLP addresses the California and federal laws that regulate leaves of absence and time off from work. The publication provides an overview of the key laws in the area, examines which employers are subject to those laws, and describes their requirements, including the new California amendments that took effect on January 1, 2017.

This publication delves into the complicated issues that surface due to the overlapping obligations that exist where two or more laws intersect. This includes the Family and Medical Leave laws, the American With Disabilities Act (“ADA”), pregnancy disability leaves, and the rules applicable to occupational disabilities. The publication provides checklists that employers can utilize to determine which laws regulate leaves and whether employees qualify for leaves or extensions.

The Manual provides readers a number of helpful appendices and forms. Among others, they include the new DLSE notice for victims of domestic violence, a sample leave designation form, FMLA and CFRA notices, a sample leave of absence request form, reproduction of the CFRA, a checklist to evaluate time off requests, and the California pregnancy disability leave regulations.

The publication is more than 210 pages in length. It can be ordered directly from Castle Publications, Ltd. for only $89.00, plus tax and shipping ($104.46 total) for the print format and $119.00, plus tax per copy ($130.31 total) for the electronic format.

EMPLOYEE HANDBOOK AND PERSONNEL POLICIES MANUAL AVAILABLE

Castle Publications, Ltd is pleased to announce the fourteenth edition of the Employee

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Handbook and Personnel Policies Manual, by Attorney Richard J. Simmons of the law firm of Sheppard, Mullin, Richter & Hampton LLP. The new edition of the book has been updated for 2017 to reflect changes in the state and federal laws, including the new organ donor leave and cell phone rules, family leave rules, and regulations of the U.S. Department of Labor concerning the federal white collar exemptions. It also features social media, electronic communications and technology policies.

The publication contains more than 450 sample personnel policies and is over 770 pages in length. It contains chapters on employee classifications, compensation and payroll practices, employee benefits, leaves of absence policies, discipline and terminations, layoffs, staff reductions, and safety, efficiency, and substance abuse in the workplace.

Among the numerous policies included in the new book are sample Family and Medical Leave Policies and policies covering electronic communications devices, social media, the Internet, email, and telecommuting. In addition, the new edition contains sample policies regarding voicemail, computer access, make-up time under AB 60, policies against harassment, vacation pay, holiday pay, sick pay under the state rules, medical leaves, policy announcements, compensatory time off, acknowledgement forms, cell phones, standards of conduct progressive discipline, at-will statements, drug and alcohol deterrence, drug testing, benefit disclaimers, doctor statements requirements, and time off rights.

This book is available from Castle Publications, Ltd for only $149.00, plus tax and shipping ($172.16 total) for the print format and $199.00, plus tax per copy ($217.91 total) for the electronic format. Orders can be placed directly with Castle Publications, Ltd. at (213) 455-7617 or online at www.castlepublications.com.

EMPLOYMENT DISCRIMINATION AND EEO PRACTICE MANUAL PUBLISHED

Castle Publications, Ltd. is pleased to announce that the Employment Discrimination and EEO Practice Manual for California Employers (Eleventh Edition) by Attorney Richard J. Simmons of Sheppard, Mullin, Richter & Hampton LLP is now available. The new edition of the book provides an up-to-date examination of the California and federal civil rights laws, including the Americans With Disabilities Act (ADA), the Fair Employment and Housing Act (FEHA), Title VII, the Uniformed Services Employment and Reemployment Rights Act (USERRA), the Age Discrimination in Employment Act (ADEA), the Civil Rights Acts of 1991, the Unruh Civil Rights Act, and numerous other state and federal laws. It also examines legislative developments and new regulations of the state and federal enforcement agencies, including the pregnancy disability discrimination rules, the ADA regulations, the sexual harassment guidelines, and other state and federal rules.

The new edition of the publication contains a detailed examination of the sexual harassment guidelines, U.S. Supreme Court cases, the state and federal posting and notification rules, and the record-keeping requirements established by law. It also provides sample posters and notices required under the sexual harassment rules, the pregnancy discrimination regulations, and the family and medical leave rules.

This book is available from Castle Publications, Ltd for only $149.00, plus tax and shipping ($172.16 total) for the print format and $199.00, plus tax per copy ($217.91 total) for the electronic format. Orders can be placed directly with Castle Publications, Ltd. at (213) 455-7617 or online at www.castlepublications.com.

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SIMMONS’ PUBLICATION ON MEAL AND REST PERIOD RULES UPDATED TO ADDRESS SUPREME COURT’S AUGUSTUS v. ABM CASE

Castle Publications, Ltd. is pleased to announce the 2017 edition of its popular publication examining California’s unique meal and rest period rules. The new edition examines the California Supreme Court’s December 22, 2016 decision in Augustus v. ABM, which reviewed a decision holding an employer liable for almost $90 million just for rest period violations. The fourth edition of California’s Meal and Rest Period Rules: Proactive Strategies for Compliance is authored by one of California’s leading experts on wage-hour law, Attorney Richard J. Simmons of the law firm of Sheppard, Mullin, Richter & Hampton LLP. The publication addresses numerous areas relating to potential liabilities, compliance strategies and the landmark decision in Brinker Restaurant Corp. Other recent cases and legal developments in this area require analysis by every HR, payroll, compensation and employment law specialist in California.

All California employers must be aware of their obligations and the steep price they may pay for non-compliance. The sanctions available for violations of these rules have led to numerous cases, including an epidemic of class action lawsuits that have flooded the courts throughout the state.

California has the toughest rules in the country. It imposes unmatched requirements and potential liabilities for employers. This new publication is designed to assist employers to understand and address their legal obligations. It also offers numerous proactive strategies and ideas to establish compliance and defend against legal challenges. Sample forms and attestations are included to remind new and existing employees of their rights to meal and rest periods and secure their cooperation.

Among the numerous subjects covered by the publication are the following; (1) the California Supreme Court’s decisions in Augustus v. ABM and Brinker Restaurant; (2) meal period rules; (3) rest period rules; (4) penalties, sanctions and premium pay remedies; (5) exceptions to the rules; (6) class action suits; (7) rules regarding combining meal periods; (8) Labor Code rules; (9) meal period timing charts; (10) proactive strategies to comply with the law; (11) sample new-hire forms; (12) record-keeping obligations; (13) new cases; (14) timing of meal periods; (15) when waivers are allowed; (16) Labor Commission rules; (17) Industrial Welfare Commission standards; (18) off-the-clock work issues; (19) timing of rest periods; (20) effect of rounding practices; and (21) sample acknowledgement forms.

The publication is over 150 pages in length and is available in print and electronic formats. It can be ordered directly from Castle Publications, Ltd. for only $89.00, plus tax and shipping per copy ($104.46 total) for the print format and $119.00, plus tax per copy ($130.31 total) for the electronic format. Orders can be submitted online at www.castlepublications.com.

NEW EDITION OF WARN-EMPLOYER’S GUIDE TO CALIFORNIA AND FEDERAL MASS LAYOFF AND PLANT CLOSING RULES

Castle Publications, Ltd. is pleased to announce the new edition of the publication entitled, WARN – Employer’s Guide to California and Federal Mass Layoff and Plant Closing Rules, by Attorney Richard J. Simmons of the law firm of Sheppard, Mullin, Richter & Hampton LLP. The seventh edition of the publication guides employers through the requirements of the Worker Adjustment Restraining and Notification Act (“WARN”) and the provisions of California law.

It examines the statutory and regulatory standards that define when a “plant closing” or “mass layoff” occurs, the notification obligations, and the persons and entities to whom notices

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must be provided. Among numerous other topics, the publication addresses the employer coverage standards, the effect of a purchase and sale, the obligations of the parties in the event of a sale, and the various exceptions to the rules.

The publication is over 70 pages in length and is available in print and electronic formats. It can be ordered directly from Castle Publications, Ltd. for only $89.00, plus tax and shipping per copy ($104.46 total) for the print format and $119.00, plus tax per copy ($130.31 total) for the electronic format. Orders can be submitted online at www.castlepublications.com.

2018 SEMINAR SCHEDULE

WAGE-HOUR, EMPLOYMENT DISCRIMINATION, WRONGFUL DISCHARGE, FAMILY LEAVE LAWS, AND EMPLOYEE HANDBOOK SEMINARS

Castle Publications, Ltd. is pleased to announce that it has scheduled full-day labor relations seminars for employers on three separate subjects that will be conducted in Los Angeles, Orange County, and in the Pasadena area. The seminars will feature Richard J. Simmons and other attorneys of Sheppard, Mullin, Richter & Hampton LLP and are highly recommended. They will cover some of the most important and timely issues that affect all California employers.

The Wage and Hour Laws Seminars will be held in Orange County on March 7, 2018, in the Pasadena area on March 13, 2018, and in Los Angeles on March 28, 2018. They will address sick pay, AB 60, the U.S. DOL rule on exemptions and the litigation blocking the rule, the new rulings and regulations of the state and federal government agencies, and the recent changes to the California overtime, exemption, meal and rest period, and flexible schedule rules. These seminars will feature the new 2018 edition of the Wage and Hour Manual for California Employers by Attorney Richard J. Simmons, which exceeds 990 pages.

The Employment Discrimination and Personnel Relations Laws Seminars will cover the numerous changes to the California discrimination laws and will also include a detailed segment on avoiding wrongful discharge liability. They will be held in Orange County on March 8, 2018, and in the Pasadena area on March 14, 2018. They will feature the eleventh edition of the Employment Discrimination and EEO Practice Manual for California Employers by Attorney Richard J. Simmons, which exceeds 800 pages.

The Employee Handbook and Personnel Policies Seminars will be held in the Pasadena area on March 15, 2018, and in Orange County on March 22, 2018. These programs will include numerous topics including segments on the new family rights laws, social media policies, COBRA, California’s sick leave statute, make-up time policies, workplace security and violence protection, domestic partner rules, and drug and alcohol testing issues. They will feature the fourteenth edition of the Employee Handbook and Personnel Policies Manual, by Attorney Richard J. Simmons. This edition of the book is over 770 pages in length and contains more than 450 sample policies.

For more information or reservations, please call Castle Publications, Ltd. at (213) 455-7617 or visit www.castlepublications.com.

PUBLICATIONS NOW AVAILABLE ELECTRONICALLY

Castle Publications, Ltd. is pleased to announce that many of its publications are available electronically for the first time. This allows our readers to have 24/7 access to the publications via the Castle Publications eReader application or through a web reader. Some of the features supported by the electronic format include: the ability to quickly find resources by searching within a publication or across those subscribed publications that will be made available electronically, the ability

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to add personal notes and access them anytime, and the ability to highlight in multiple colors and tag highlights with editable categories.

We are excited to be able to offer this new format in 2017! For more information, please call Castle Publications, Ltd. at (213) 455-7617 or visit www.castlepublications.com.

ABOUT THE ALERT

The ALERT is a publication of Castle Publications, Ltd., and is published bi-monthly. Subscriptions are available in hard copy or electronic format for $115.00 per volume (six issues) and are payable in advance. Single issues are available for $25.00 each. For more information, please call Castle Publications, Ltd. at (213) 455-7617 or visit our website at www.castlepublications.com.

The ALERT is intended to apprise readers of noteworthy developments involving labor and employment laws affecting or possibly affecting California employers. Its contents are based upon recent statutes and decisions, but should not be viewed as legal advice or legal opinions of any kind whatsoever.

The articles contained in the ALERT represent interpretations by its authors and may be affected by various developments, including judicial and administrative appeals, legislative activity, and conflicting judicial authority. Accordingly, employers and other readers are advised to consult their own legal counsel with respect to any of the issues, statutes, decisions, or matters discussed in the ALERT, and should rely on the advice of their counsel and not on the ALERT when making or implementing personnel-related decisions.

EDITORIAL STAFF

Senior Editor and Author Richard J. Simmons Partner Sheppard, Mullin, Richter & Hampton LLP

Matthew Sonne Partner Sheppard, Mullin, Richter & Hampton LLP

Daniel McQueen Partner Sheppard, Mullin, Richter & Hampton LLP

ORDER FORM

CALIFORNIA LABOR AND EMPLOYMENT

ALERT NEWSLETTER By Richard J. Simmons, Matthew M. Sonne & Daniel McQueen, Attorneys with Sheppard, Mullin, Richter & Hampton LLP, L.A.

A Tool For

California Employers To

Stay On The Cutting Edge

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The ALERT NEWSLETTER provides brief, concise and understandable summaries of significant developments. It is published six times a year.

The ALERT reviews and analyzes significant cases in California state and federal courts, important new statutes, regulations and laws, and key developments at the administrative level, including the EEOC, the FEHC, the Labor Commission, the Wage and Hour Division and the NLRB. Among the subjects covered are:

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• Wage-Hour Matters• Employment Contracts• National Labor Relations Act• EEO Developments• Workers’ Compensation

• Recent Court Cases• Labor Code Rules• Workplace Violence and OSHA• Personnel Practices and Handbooks• Benefit Matters

The Alert is written by attorneys who are experts in their fields. It is the perfect resource to help individuals stay on the cutting edge of their professions. Its subscribers include:

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ALERTThe California Labor and Employment

NEWSLETTER

• California has the strictest Labor and Personnel Laws in the country!

• Published every two months...this publication keeps you informed.

• The ALERT assists employers to identify and avoid common pitfalls and stay on top of new laws, decisions, and regulations.

• The ALERT can protect your company from substantial liabilities.

• The ALERT NEWSLETTER provides an up-to-date analysis of important developments in California and Federal Laws concerning personnel, employment and benefit law matters.

• This publication is the living supplement to Richard J. Simmons’ Wage and Hour, Employment Discrimination, Employee Handbook and Personnel Policies and Wrongful Discharge, Staff Reduction and Employment Practices Manuals.

• The ALERT has been a reliable resource to stay abreast of California and federal law developments for over 30 years.

• Wrongful Termination• EEO, FEHC and DFEH Matters• Family Leaves• Immigration Rules• Newest Laws

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